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Bilateral agreements and
a TRIPS-plus world:the Chile-USA Free Trade Agreement
Pedro Roffe
Published by:
Quaker International Affairs Programme, Ottawa
Project undertaken with the financial support of the Government of Canada provided through the Canadian International Development
Agency (CIDA)
4TRIPS
Issues
Papers
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Summary 2
1. General background to the FTA 3
1.1 Antecedents 3
1.2 Perceived advantages 41.3 US approach to free trade agreements and IP 4
1.4 Chile’s approach to free trade agreementsand IPRs 5
1.5 Background to the IPRs Chapter of the FTA 8
2. Objectives, temporal scope of application andgeneral principles 10
2.1 Objectives 10
2.1.1 Reduction of distortions and impedimentsto trade 10
2.1.2 Transparency 10
2.1.3 The international IP architecture 11
2.1.4 TRIPS and public health 112.1.5 Promotion of innovation, transfer and
dissemination of technology 11
2.1.6 Anticompetitive practices and bilateralcooperation 11
2.2 Temporal scope of application 12
2.2.1 Entry into force 12
2.2.2 Situations pre-FTA 13
2.3 General principles 15
2.3.1 Minimum standards 15
2.3.2 Non-derogation clause 15
2.3.3 National treatment and most-favoured
nation principles 162.3.4 The MFN principle 18
3. Substantive IP standards 19
3.1 Introduction 19
3.2 Patents and regulated products 19
3.2.1 Patents 19
3.2.2 Regulated products 24
3.3 Copyright and related rights 27
3.3.1 Copyright 27
3.3.2 Related rights 30
3.3.3 Obligations common to copyright andrelated rights 31
3.3.4 Protection of satellite signals 34
3.3.5 Domain names in the internet 35
3.3.6 Identification signs: trademarks and GIs 37
4. Enforcement and dispute settlement 42
4.1 Introduction 42
4.2 Enforcement, acquisition and maintenanceof rights 42
4.2.1 General provisions 42
4.2.2 Civil and administrative procedures andremedies 43
4.2.3 Provisional measures 44
4.2.4 Border measures 44
4.2.5 Criminal procedures and remedies 45
4.2.6 Limitations on liability for Internet Service
Providers 45
4.3 The FTA dispute settlement mechanism 46
4.3.1 General considerations 46
4.3.2 The main features of the FTA mechanism 46
4.3.3 Non-violation complaints 47
5. Final remarks 49
Acronyms 51
Bibliography and reference material 52
Annexes
A. The Chilean Intellectual Property System 54
B. Intellectual property treaties to which Chile
is Party or shall become a Party due to recent
free trade agreements 56
Tables
1. Intellectual property treaties to whichChile is a Party 54
2. Chile: Number of patent applicationsand patents granted 55
Figures
1. Chile: Number of trademark applicationsand registrations 55
Boxes
1. The Trade Promotion Authority(Trade Act of 2002) 5
2. Chile-EFTA 7
3. Chile-EU Association 8
4. Original US demands in the IP Chapter 9
5. FTA Chapter 17 Preamble 10
6. Transitional provisions 13
7. The Canada–Term of Patent Protectioncase at the WTO 14
8. Regulated products in recent UStrade agreements 25
9: The DMCA and developing countries 33
10. Top Level Domain (TLD) 35
11. The UDRP 36
12. Formal requirements affecting decisions andnotifications in trademarks procedures 40
13. Mutual obligation to protection of particular geographical indications 40
14. Different steps in the settlement of a dispute 47
1
Contents
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1 For the full text of the agreement in English and
Spanish see
http://www.ustr.gov/new/fta/Chile/final/
2 Saez et al, 1999
3 The Republic of Korea made its first bilateral
trade agreement ever with Chile in March 2004
This paper focuses on the Free Trade Agreement between
Chile and the United States of America (USA) (hereinafter,
the FTA)1. The FTA is composed of 24 chapters, dealing with
broad aspects of trade, including general provisions estab-
lishing a free trade zone between the two countries, defini-tions, administrative aspects, settlement of disputes and spe-
cific chapters dealing with standards in areas such as market
access, services, investment, telecommunications and intel-
lectual property (IP). Chapter 17 refers to IP. It begins with a
general preamble and is followed by 12 sections dealing,
respectively, with general provisions, trademarks, domain
names on the internet, geographical indications, copyright,
related rights, obligations common to copyright and related
rights, protection of encrypted program-carrying satellite
signals, patents, measures related to certain regulated prod-
ucts, enforcement of intellectual property rights and final
provisions.It is not the intention of this paper to make an evaluation of
the impact of the FTA Chapter on intellectual property rights
(IPRs). Its purpose is to contribute to a better understanding
of TRIPS-plus issues, the specific contents of the FTA and
the lessons that could be drawn from the negotiations
between the most powerful and technologically advanced
country in the world – with clear stakes in IPRs – and a small
and dynamic developing country that has one of the most
open and liberal economies of the Americas.
The two countries came prepared to the negotiations. The US
position on trade liberalization and IP issues was well known
to its counterpart. More precisely, the Trade PromotionAuthority (TPA) provided broad negotiating parameters that
are transparent and to the point. Moreover, the bilateral treaty
between the USA and Jordan constituted an important prece-
dent for future negotiations concerning IPRs.
Since the restoration of democracy, Chile has followed a
consistent and multidimensional strategy of trade liberaliza-
tion. Of Latin American countries, it has promoted one of the
most active policies of bilateral trade agreements during the
1990s, based on both foreign policy and economic consider-
ations2. Its bilateral trade policy has not been limited to the
Americas but has expanded to major partners in Europe and
recently to Asia (South Republic of Korea3, India, andChina).
On IP issues, in the early 1990s Chile was the first Latin
American country that amended its domestic law to limit the
exclusions from patentability particularly for pharmaceutical
products. It also adhered to a number of IP multilateral
treaties. Chile also included in its bilateral trade agreements
with Mexico, European Free Trade Association (EFTA) and
the European Union (EU), which preceded the FTA, impor-tant chapters dealing with IP. However, as noted in this study,
the FTA is unprecedented in many aspects particularly with
respect to the Agreement on Trade-Related Aspects of
Intellectual Property Rights (hereinafter, “TRIPS” or “the
TRIPS Agreement”).
The FTA builds on the international architecture of IPRs. It
establishes as a major principle that nothing in the
Agreement derogates from the obligations and rights of the
Parties by virtue of TRIPS or other multilateral IP agree-
ments administered by the World Intellectual Property
Organization (WIPO) (hereinafter referred to as the “non-
derogation principle”). It enshrines the national treatment principle of non-discrimination between nationals of the two
countries and, as a consequence of the most-favoured nation
clause in TRIPS, the advantages, benefits, privileges granted
by the FTA are automatically accorded to the nationals of all
other Members of the World Trade Organization (WTO).
Because of the principle of non-derogation, the FTA does not
deal with all IPR-related subject matters. It focuses on a few
but important ones. It contains detailed provisions on issues
not dealt with at all in TRIPS such as domain names on the
Internet, related rights of performers and producers of
phonograms, remedies against the circumvention of effective
technological measures, effective legal remedies to protectrights management information and protection of encrypted
program-carrying satellite signals. In traditional areas
already covered by TRIPS, it expands the coverage of trade-
marks and the protection of pharmaceutical products.
On copyright, the FTA, contrary to other bilateral agree-
ments signed by the USA, makes a distinctive difference
between copyright and related rights reflecting the different
legal systems prevailing in the two countries. In this area,
one major development relates to the expansion of the terms
of protection that in the case of Chile results in an extension
for most works to 70 years compared to 50 under TRIPS.
For pharmaceutical products, it expands protection by differ-ent means, including:
• the reinforcement of the provisions on marketing and
sanitary approvals;
2
Summary
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1.1 Antecedents
In the early 1990s, Chile and the United States of America
(USA) started discussions on the possibility of launching
negotiations on a free trade agreement. At that time, the
Uruguay Round was not yet completed, so the possibility of
considering higher standards of protection on intellectual property (IP) was not in the mind of the negotiators. During
the first stages of the discussions Chile was mainly con-
cerned with the impact on its domestic legislation of eventu-
ally joining the North American Free Trade Agreement
(NAFTA)4.
For more than 10 years, economic and legal information was
exchanged between Chile and the USA on different aspects
of a possible trade agreement including on intellectual prop-
erty rights (IPRs). Different alternatives and forms of associ-
ation were considered and analyzed, including the possibili-
ty of Chile becoming part of NAFTA5 and some exploratory
meetings were held jointly with Mexico and Canada. Thoseearly attempts did not make progress and were overtaken by
events.
Intensive discussions were resumed in late 2000 after
Presidents Ricardo Lagos and William J. Clinton agreed to
launch negotiations on 29 November 2000. Both delegations
held a series of 14 negotiating rounds with teams of special-
ists alternating between Chile and the USA.
Parallel to those developments three external factors played
a role in the FTA negotiations: namely, the launching of the
Doha Development Round at the World Trade Organization
(WTO); the regional negotiations for a Free Trade Area of
the Americas (FTAA); and the enactment of the Trade
Promotion Authority (TPA)6 in the USA.
In effect, simultaneously with the bilateral negotiations of
the FTA, the WTO´s Council for Trade-Related Aspects of
Intellectual Property Rights (hereinafter, “TRIPS” or the
“TRIPS Agreement”) embarked on the implementation of
paragraph 6 of the Doha Ministerial Declaration on Public
Health of 14 November 20017. Those discussions influencedthe pace of the negotiating process and its eventual outcome.
3
1. General background to the FTA
4 The North American Free Trade Agreement
(NAFTA) is a regional agreement between theGovernment of Canada, the Government of the
United Mexican States and the Government of the
United States of America to implement a free
trade area which entered into force in January
1994. See NAFTA
5 According to Article 2205.1, NAFTA, “Any coun-
try or group of countries may accede to this
Agreement subject to such terms and conditionsas may be agreed between such country or coun-
tries and the Commission and following approval
in accordance with the applicable approval proce-
dures of each country.”
6 The Bipartisan Trade Promotion Authority, also
known as the TPA, is part of the Trade Act of
2002. It was passed in 2002, eight years after the
last TPA(then known as fast-track) had expired.See www.tpa.gov and discussions below
7 Paragraph 6 deals with the issue of countries
with insufficient capacity or no capacity to manu-
facture drugs. See UNCTAD-ICTSD, Policy Paper ,
Chapter 6
• the adjustment of the term of the patent to compensate
for unreasonable delays in its granting;
• the prohibition of the use of undisclosed information
about the safety and efficacy of pharmaceutical products
for 5 years from the date of its marketing or sanitary
approval;
• the extension of the patent term to compensate for unrea-
sonable curtailment of the patent term as a result of mar-
keting approval; and finally,
• the granting of marketing approval to third parties
requires the consent or acquiescence of the patent owner.
During the negotiations of the FTA, the provisions affecting
pharmaceutical products were the subject of intense discus-
sions as they took place almost simultaneously with the
WTO deliberations on TRIPS and access to medicines.
The study is divided into five parts:
part one provides the general background to the bilateral
free trade agreement between Chile and the USA by
reviewing the main antecedents and the respective nation-
al policies of each country on trade liberalization and IP
issues;
part two analyses the objectives, scope of application and
general principles;
part three looks at the substantive IP standards incorpo-
rated in the FTA by comparing them with the TRIPS
Agreement and recent bilateral trade agreements signed
by the USA;
part four considers the enforcement and settlement of
disputes provisions of the FTA; lastly,
part five concludes with final remarks.
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4
8 See FTAA, IPRs Chapter
9 For a comparison of the legal texts between the
TRIPS and the draft IP provisions being discussed
in the FTAA, see Vivas-Eugui 2003 and
Supplementary Table, available at:
http://www.geneva.quno.info/pdf/FTAASupptableA4
.pdf or http://www.qiap.ca/pages/publications.html
10 The USA negotiated simultaneously FTAs with
Chile and Singapore. The negotiations with
Singapore were launched during the APEC
Economic Leaders meeting held in Brunei in
2001, and completed by the end of 2002
11 In the period 1996-2002, the USA represented
around 20% of its total exports and imports and
30% of its inbound foreign investment. See,
Message to Congress, 2003
12 Chile, as well as other important US trade part-
ners such as Canada, Mexico, the EU, Korea,appears in the 2004 Special 301 Report. The
Report sets the US IPRs policy priorities in its
negotiations. In the 2004 Report the USA has
stressed the importance of adopting the WIPO
Internet Treaties, controlling optical media produc-
tion, legitimate use of software by government
agencies, and implementing the TRIPS
Agreement (especially Article 39.3 on protection of
test data). See the 2004 Special 301 Report at
http://www.ustr.gov/reports/2004-
301/special301.htm
13 The Canada – US Free Trade Agreement
entered into force on January 1, 1989. See,http://wehner.tamu.edu/mgmt.www/nafta/fta/
14 Reichman, 2003
15 The agreement was signed on October 24,
2000. http://www.sice.oas.org/Trade/us-
jrd/usjrd.asp
At the regional level both Chile and the USA were active
participants in the negotiations of the FTAA, which also
included a Chapter on IP8. The composite text of the draft
FTAA-IPRs Chapter, under negotiation, refers to similar pro-
visions finally incorporated in the FTA9.
The third important development was the discussions in the
US Congress on the approval of the TPA (Box 1), to renew
the US presidential authorization to negotiate free tradeagreements under certain conditions. The absence of such
authorization could have frozen or postponed the negotia-
tions with Chile. The approval of this legislative Act was a
complex exercise whose final adoption accelerated the par-
allel negotiations with Chile and Singapore10.
1.2 Perceived advantages
A free trade agreement between Chile and the USA was per-
ceived as giving political and economic advantages to both
countries. For the USA, it meant signing the most compre-
hensive free trade agreement since NAFTA, including provi-
sions on intellectual property. Commercially, for Chile, theUSA is its major trade and investment11 partner. At the same
time, for the Chilean government, the signing of trade agree-
ments, within the same calendar year with both the European
Union (EU) and the USA, would be, as actually happened, a
major achievement and political success.
Throughout the negotiations, the economic and development
asymmetries between the two countries permeated the dis-
cussions. One single example reflects these differences:
Chile’s yearly exports amount to two-thirds of what the US
exports in one single week.
As a result of the FTA, 85% of bilateral trade in consumer
and industrial products became tariff-free on 1 January 2004,with most of the remaining tariffs to be eliminated by 2008.
Close to two-thirds of farm products will be tariff-free by the
same year and all tariffs and quotas will be phased out with-
in 12 years. According to Chilean trade authorities, notwith-
standing the asymmetries referred above, the outcome of this
process should represent an increase of 16% of Chilean
exports, which may increase its GNP by 0.7 points.
Another important achievement of the negotiations, from the
Chilean authority’s point of view, was the consolidation of
the Generalized System of Preferences (GSP) granted by the
USA to Chile and subject to periodical renewal and negotia-
tions. All products included in the GSP became tariff-free. In
addition, Chile obtained the elimination of tariff escalation,
which limited the diversification of Chilean exports. Tariff
free trade for important exporting Chilean sectors, such as
textiles, clothes and shoes, was also achieved.
1.3 US approach to free trade agreements
and IP
The USA has followed a consistent and unremitting policy of
elevating IPRs standards. It has done so through unilateral,
bilateral, regional and multilateral action. First of all, it has
raised the levels of protection domestically and has kept on
monitoring enforcement of IPRs internationally, through the
Special 301 Report, by listing countries that do not meet US
expectations in this field. The latter is part of the Trade Act
which orders the US Trade Representative to produce an
annual report that is the first step to imposing trade sanctionson countries which systematically damage the interests of
US IPR holders12.
Regionally and multilaterally, the USA has always been at
the forefront of negotiations within the FTAA and Asia-
Pacific Economic Cooperation (APEC), and prominently so
during the Uruguay Round and at the World Intellectual
Property Organisation (WIPO).
Bilaterally, even before the completion of the TRIPS
Agreement the USA concluded its bilateral agreement with
Canada13, in which IP features prominently. The USA had a
particular concern about liberal Canadian policies in allow-
ing compulsory licensing in support of its pharmaceuticaldomestic generic industry14. Again, in NAFTA, the Chapter
on IP is an important component of the treaty, which follows
closely the contents of the TRIPS Agreement.
While negotiating with Chile, the USA negotiated simulta-
neously with Singapore. It also negotiated some other deals
after NAFTA. Indeed, on October 24, 2000, the USA reached
an agreement with the Hashemite Kingdom of Jordan15 on
the establishment of a Free Trade Area, which entered into
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force in December 2001. This agreement had great political
implications because it anticipated the “TRIPS-plus”16 policy
of the USA. The Bilateral Trade Agreements (BTAs) negoti-
ated with Lao People’s Democratic Republic and with the
Socialist Republic of Vietnam)17 also have extensive TRIPS-
plus provisions.
The USA has since concluded free trade agreements with
Israel18
, Australia19
, Morocco20
, and with Central Americancountries (CAFTA), including Costa Rica, El Salvador,
Guatemala, Honduras and Nicaragua21. The Dominican
Republic recently joined CAFTA. In all of them, specific
provisions on IPRs are included. The USA has also started
free trade negotiations with the five nations of the African
Southern Customs Union (SACU)22, including Botswana,
Lesotho, Namibia, South Africa and Swaziland; with
Bahrain23; and a number of Middle-East countries.24 Trade
agreements with Thailand, Panama, Colombia, Peru, Bolivia
and Ecuador 25 are also in the making.
In general terms, the official negotiating objectives of the
USA with respect to IPRs are clearly enunciated in the TPAAct of 2002 (Box 1). For Chile, the major demands made by
the USA are summarized, in Box 4.
1.4 Chile’s approach to free trade
agreements and IPRs
At the beginning of the 1990s, the newly democratically
elected government of Chile began developing a trade poli-
cy based on three main pillars: (i) unilateral reduction of
trade tariffs, across the board, from 15% in 1989 to 6% in
2003; (ii) enhancement of its participation in multilateral
trade negotiations; and (iii) engagement in bilateral negotia-
tions of free trade agreements. This multidimensional strate-gy has been characterized as Chile’s “lateral trade policy”
consisting of multilateral, plurilateral and bilateral agree-
ments that “have complemented the process of unilateral
openness…”26. This meant, in practice, that when Chile con-
5
16 TRIPS-plus refers to commitments that gobeyond what is already included or consolidated
in the TRIPS Agreement. TRIPS-plus agreements
or commitments can imply: Inclusion of a new
area of IPRs; implementation of a more extensive
standard; and, elimination of an option for
Members under the TRIPS Agreement. See
Vivas-Eugui, p 4, 2003
17 The US–Laos Bilateral Trade Agreement (BTA)
was concluded in 1997 and signed in 2003. See,http://www.ustr.gov/regions/asia-pacific/2003-04-
bta-laos.pdf. The US-Vietnam BTA was signed in
July 2000. See, http://www.ustr.gov/regions/asia-
pacific/text.pdf
18 The agreement was signed on April 22, 1985,
but the final phase of the agreement was fully
implemented on January 1, 1995. See text at:
http://www.us-israel.org/jsource/US-Israel/FTA_Text.html
19 The agreement was concluded on February
2004 and signed in May 2004. See:
http://www.ustr.gov/new/fta/Australia/text/
20 Negotiations were concluded on March 2, 2004
and the FTA was signed on June 15, 2004. See
the US–Morocco FTA at
http://www.ustr.gov/new/fta/Morocco/text/index.ht
m
21 CAFTA was signed in May 2004. See,
http://www.ustr.gov/new/fta/cafta/text/index.htm22 The USA and the SACU launched negotiations
for a Free Trade Agreement in Pretoria, South
Africa, on June 2, 2003. It will be the first free
trade agreement for the USA in Sub-Saharan
Africa and the first time that SACU nations would
jointly negotiate such kind of agreement. This will
be done under the framework of the African
Growth and Opportunity Act
23 Negotiations with Bahrain for a free trade agree-
ment were launched on January 2004 and con-
cluded on May 28, of the same year. See “Trade
Facts” of March 2, 2004, available at the Office of
the United States Trade Representative web site:
http://www.ustr.gov
24 The USA announced on May 9, 2003, a propos-
al to create a free trade area between the USA
and several countries in the Middle East over the
next decade. The proposal consists of gradual
steps to increase trade and investment with the
USA. The first step is to work closely with nations
that want to become members of the WTO, in
order to expedite their accession (mainly Saudi
Arabia, Lebanon, Algeria and Yemen). Another step is to enhance trade and investment frame-
work action plans (Bahrain, Egypt, Tunisia,
Algeria, Saudi Arabia, signed on July 2003;
Kuwait, signed on February 2004, and Yemen,
signed February 2004). The third step corre-
sponds to free trade agreements with Israel
Jordan Morocco and Bahrain. See USTR, 2004
25 Negotiations with Colombia, Ecuador and Peru
were launched on May 18 - 19, 2004
26 Saez et al, 1999
Box 1: The Trade Promotion Authority
(Trade Act of 2002)
Section 2102
(4) Intellectual property. …The principal negotiating objectives of
the USA regarding trade-related intellectual property are…
(A) to further promote adequate and effective protection of intel-
lectual property rights, including through—(i)(I) ensuring accelerated and full implementation of the
Agreement on Trade-Related Aspects of Intellectual Property
Rights referred to in section 101(d)(15) of the Uruguay Round
Agreements Act (19 U.S.C. 3511(d)(15)), particularly with
respect to meeting enforcement obligations under that agree-
ment; and
(II) ensuring that the provisions of any multilateral or bilateral
trade agreement governing intellectual property rights that is
entered into by the USA reflect a standard of protection similar to
that found in US law;
(ii) providing strong protection for new and emerging technolo-
gies and new methods of transmitting and distributing products
embodying intellectual property;
(iii) preventing or eliminating discrimination with respect to mat-
ters affecting the availability, acquisition, scope, maintenance,use, and enforcement of intellectual property rights;
(iv) ensuring that standards of protection and enforcement keep
pace with technological developments, and in particular ensuring
that rightholders have the legal and technological means to con-
trol the use of their works through the Internet and other global
communication media, and to prevent the unauthorized use of
their works; and
(v) providing strong enforcement of intellectual property rights,
including through accessible, expeditious, and effective civil,
administrative, and criminal enforcement mechanisms;
(B) to secure fair, equitable, and non-discriminatory market
access opportunities for US persons that rely upon intellectual
property protection; and
(C) to respect the Declaration on the TRIPS Agreement and
Public Health, adopted by the World Trade Organization at the
Fourth Ministerial Conference at Doha, Qatar on November 14,
2001.
Source: http://www.tpa.gov/pl107_210.pdf
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cluded its negotiations with the USA, in December 2003, it
had negotiated important and comprehensive trade agree-
ments with a large number of countries. Between 1990 and
1999, Chile concluded trade agreements with all Latin
American countries and with Canada. In 2002 negotiations
were completed with the EU, EFTA and the Republic of
Korea. This determined policy of the three consecutive coali-
tion governments, according to official sources, has highly
contributed to reduce the rate of poverty from 47% in 1989
to 20% by the year 200327.
Chile has signed basically two types of trade agreements
with its trade partners: the so-called Economic
Complementation Agreements ( Acuerdos de
Complementación Económica), which are basically first gen-
eration market access agreements, and Free Trade
Agreements. The agreements signed with Bolivia, Colombia,
Cuba, Ecuador, Mercosur, Peru and Venezuela correspond to
the first category, while those concluded with Canada,
Mexico, Central America, the Republic of Korea, EFTA, EU
and the USA correspond to free trade agreements28.
The first free trade agreement was signed with Canada in
December 1996 and entered into force on July 5, 1997. In
addition, two side agreements were concluded with that
country on environment and labour issues29. Tariffs corre-
sponding to over 80% of tradable goods were promptly elim-
inated and the full tariff elimination programme completed
by the end of 2003. Few products were subject to a special
elimination programme that will conclude by the year 2014.
The agreement also included provisions on investment, serv-
ices, rules of origin (adapted from the NAFTA), subsidies,
customs procedures, dispute settlement and antidumping.
There is a sole provision on IP matters30. Parties agreed to
mutually recognize and protect geographical indications(GIs) of the other Party. In the case of Canada, it will recog-
nize “Chilean Pisco” ( Pisco Chileno), and Chile will recog-
nize “Canadian Whisky.”
Chile concluded its free trade agreement with Mexico on
April 17, 1998, which entered into force in August 1999.
This agreement replaced and deepened an earlier 1991
Economic Complementation Agreement. The 1999 agree-
ment led to a phasing out of tariffs on trade in goods between
Chile and Mexico, except for products of some specific sec-
tors such as agriculture and automobiles. In addition to
goods, the agreement included provisions, among others, on
services, investment, air transport, telecommunications, mar-
ket access, rules of origin, safeguards measures and IP.
Although the agreement contains a whole chapter on IP31 it is
mainly based on selected provisions of the TRIPS
Agreement. This meant in practice that Chile anticipated the
implementation of those obligations before the time frame
permitted under Article 65, TRIPS32, mainly on trademarks.
Although the agreement is based on TRIPS, it goes beyond it
in several respects. For example, it provides for a longer termof protection in the case of trademarks (10 years) compared
to TRIPS (7 years).33 Another TRIPS-plus trademark provi-
sion is that the agreement provides that Parties will require
the use of the trademark for the renewal of registrations.34
Finally, is the requirement to provide for civil liability in
cases of acts of decoding or trafficking of devices whose
main function is to decode an encrypted program-carrying
satellite signals35. The agreement also provides for the pro-
tection of specific GIs such as Mexico’s “Tequila” and
“ Mezcal ”, and Chile’s “ Pisco”36, “ Pajarete”, “Vino
Asoleado” and several Chilean wine regions as GIs37.
During the Second Summit of the Americas in April 1998, thePresidents of Chile, Costa Rica, El Salvador, Guatemala,
Honduras and Nicaragua agreed to start negotiations on a free
trade agreement. These were launched in August 1998 and the
agreement signed in October 199938. The first part of the
agreement is mainly dedicated to trade in goods, services and
investment, while the second includes bilateral protocols with
each country containing provisions on tariffs reduction, rules
of origin, trade in services and custom valuation. The agree-
ment includes two Memorandums of Understanding related
to Education and Culture and Political issues. On IP, the only
provisions included cover the mutual recognition and protec-
tion of GIs of the other Parties. It does not list any specific
GIs, instead it provides for a system of protection of the GIsthat each Party will notify to the other 39.
In December 1999, Chile and the Republic of Korea
launched free trade negotiations after the agreement reached
by Presidents Eduardo Frei and Kim Dae Jung, at the APEC
Summit of Leaders the previous year. This was the first time
that Korea initiated negotiations for a free trade agreement.
For Chile, Korea was the sixth largest trade partner, but high
tariffs on agricultural products were a serious barrier to
Chilean exports. The free trade agreement included a large
number of issues such as trade in goods, rules of origin, serv-
ices, investment, telecommunications, competition, govern-
ment procurement, transparency, dispute settlement mecha-
6
27 Message to Congress, 2003
28 DIRECON
29 These side agreements do not establish trade
sanctions in case of infringement in these two
areas, but include mandatory supervision of the
Government on these matters.
30 Article C-11 and Annex C-11 of the
Chile–Canada bilateral agreement, DIRECON
31Chapter 15, Chile-Mexico FTA
32 As a developing country, Chile had until the 1
January 2000 to implement the TRIPS Agreement
33 Article 15-19, Chile–Mexico FTA
34 Article 15-21 and Annex 15-21, Chile–MexicoFTA
35 Article 15-12, Chile–Mexico FTA
36Nevertheless in the case of the Chilean geo-
graphical indication (GI) “Pisco”, Mexico reserved
its rights to give protection to the same product
coming from Peru, which disputes with Chile the
use of that GI
37 Article 15-24, Annex 15-24 and Appendix 15-24
Chile–Mexico FTA
38For the Spanish version of the Chile-Central
America FTA see:
http://www.direcon.cl/frame/acuerdos_interna-cionales/f_bilaterales.html
39 Article 3.12, Chile-Central America FTA at
http://www.sice.oas.org/trade/chicam/chicam2.asp
#cont. To date, the only GIs that have been noti-
fied are Pisco, Vino Asoleado and Pajarete for
Chilean spirits and wines. Because the trade
agreement has entered into force only for El
Salvador and Costa Rica, Chile has notified its
GIs only to those two countries
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nism and IPRs. The IPRs Chapter is brief and includes pro-
visions on trademarks, GIs40, enforcement – a reference to
the relevant TRIPS provisions – and a consultative mecha-
nism on the matter 41.
At the end of the same year, Chile and EFTA42 started con-
sideration of a free trade agreement aimed at the creation of
a free trade zone between both parties. Negotiations started
by the end of 2000 and an agreement was signed on June 26,2003, after six rounds of negotiations43. The agreement
includes provisions on trade in goods, rules of origin, trade
in services, government procurement, competition policy,
transparency, dispute settlement and IPRs. On the latter a
very broad provision was adopted to protect IPRs on the
basis of national treatment as defined in the agreement. In an
annex to the agreement the Parties agreed to become Party,
by the year 2007, to a number of international agreements
(Box 2).
The agreement with EFTA contains additional provisions on
patents, undisclosed information, industrial designs44, GIs
and enforcement, consonant with the TRIPS standards45.
Finally, negotiations between Chile and the EU started on
April 10, 2000 and were followed by nine additional rounds
of negotiations completed by April 200246. The agreement
entered into force on February 1st, 2003. From that date on,
85% of Chilean products have been tariff-free, representing
96% of all Chilean exports to the European Community
market47.
Although this Association Agreement with the EU is mainly
trade related, there are some institutional, political and inter-national cooperation aspects that have not been included in
other agreements negotiated by Chile. The agreement
includes provisions on trade in goods, antidumping, border
measures, rules of origin, sanitary and phytosanitary meas-
ures, wines and spirits, trade in services, including telecom-
munications, maritime transport, financial services, govern-
ment procurement, competition, dispute settlement, and
IPRs.
Title VI of Part IV of the Agreement between Chile and the
EU refers specifically to IP matters and highlights the need
to “ensure adequate and effective protection to intellectual
property rights in accordance with the highest internationalstandards48, including effective means of enforcing such
rights provided for in international treaties”49.
The agreement obliges the Parties to become by 1 January 2007
members of a number of international agreements (Box 3).
Probably, the most significant IP related provisions are con-
tained in Annex V, on the “Agreement on the Trade in
Wines” and Annex VI concerning Spirits. These annexes
include provisions on the reciprocal protection of GIs relat-
ed to wines and spirits, and the protection of traditional
expressions (of both Parties)50.
Annex V (Article 5.4) on the Agreement on the Trade in
Wine refers to the protection of “homonymous GIs”. Itstates that in those cases protection shall be given to both
geographical indications but the consumer shall not be mis-
lead as to the actual origin of the wine. In addition, where a
GI protected under the agreement is homonymous with the
name of a geographical indication outside the Parties, the lat-
ter name may be used to describe and present a wine of the
geographical area to which the name refers, provided it is:
traditionally and consistently used; its use for that purpose is
regulated by the country of origin; and consumers are not
7
40On GIs, Chile recognised protection to “Korean
Ginseng” for ginseng, “Korean Kimchi ” for kimchi ,and “Boscong ” for tea; while Korea recognized, as
in the case Chile-Mexico, protection for “Pisco” ,
“Pajarete”, “Vino Asoleado”, and several Chilean
wine zones
41Negotiations concluded on October 24, 2002 and
entered into force on April 1, 2004. See, DIRECON
42EFTAMembers are Iceland, Liechtenstein,
Norway and Switzerland
43The agreement between Chile and the EFTA
countries is scheduled to enter into force by June
2004
44On this matter a protection term of 15 years from
the date of application was agreed for industrial
designs45DIRECON
46DIRECON
47For information on the impact on Chile–EU trade
by the accession of the 10 new members to theEU, see http://www.direcon.cl/frame/noticias/docu-
mentos/Ampliaci%F3n%20UE.PDF
48The meaning and extent of “highest international
standards” was a highly controversial issue in
Chile during the Parliamentarian discussion of the
Agreement. The same terminology is used in the
Agreement between the EU and South Africa
49See Article 168 of the Agreement establishing an
association between the European Community
and its Member States, and the Republic of Chile.For the English text see:
http://europa.eu.int/comm/trade/issues/bilateral/co
untries/chile/euchlagr_en.htm and Spanish version
at
http://www.sice.oas.org/Trade/chieu_e/cheuin_e.a
sp
50This is the first time that Chile recognizes—in an
international instrument—the existence of “tradi-
tional expressions” as other countries did before
when concluding free trade agreements with the
EU
Box 2: Chile-EFTA
List of international agreements that Parties agreed to becomemembers of
• The World Intellectual Property Organization Copyright Treaty,
WCT, 1996;
• The World Intellectual Property Organization Performances
and Phonograms Treaty, WPPT, 1996;
• The Patent Cooperation Treaty, of June 19, 1970, Washington
Act amended in 1979 and modified in 1984;
• The Nice Agreement Concerning the International
Classification of Goods and Services for the Purposes of the
Registration of Marks of 15 June, 1957, Geneva Act 1977,
amended in 1979; and
• International Convention for the Protection of New Varieties of
Plants, 1978 or 1991.
The Parties also agreed to join the Budapest Treaty on the
International Recognition of the Deposit of Microorganisms for
the Purposes of Patent Procedure, of April 28, 1977, no later
than January 1, 2009.
Source: http://secretariat.efta.int/Web/ExternalRelations/PartnerCountries/
CL/CL_RUAP/Annexes/Annex_XII.pdf
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misled into believing that the wine originates in the Party
concerned51.
The Association Agreement between Chile and the EU is also
a TRIPS-plus Agreement especially on the protection of GIs.
In brief, the conclusion of the FTA was the culmination of aclearly bilateral policy and designed trade strategy and gen-
erally perceived by Chilean society as a major political and
economic achievement. The IP issues were already covered
in almost all bilateral trade agreements signed by Chile.
However, GIs were the main concern in most of those agree-
ments. But, in the case of the agreements signed with
Mexico, EFTA and the EU, beyond deepening the imple-
mentation of TRIPS, important commitments were made for
the ratification of a number of multilateral treaties adminis-
tered by WIPO. Annex A to this study provides a more
detailed picture of the IPsituation in Chile including its inter-
national obligations. Annex B summarizes Chile's treatyobligations as a result of these bilateral agreements.
1.5 Background to the IPRs Chapter
of the FTA
Although, as briefly reviewed above, all the free trade agree-
ments negotiated by Chile included provisions on IP those
finally incorporated in the FTA are clearly the most compre-
hensive ones. They are also the ones that go beyond TRIPS
in many respects.
For the USA, the negotiations with Chile represented an
important opportunity to consolidate changes in the area of IP for which some industrial domestic groups were driving
for reforms, namely in the area of new copyright disciplines
in the digital environment and improved protection for phar-
maceutical and agricultural chemical products. The US
copyright industry, including entertainment and software,
together with the pharmaceutical sectors, from both coun-
tries, played a key role during the negotiations.
The Chilean domestic pharmaceutical sector is relatively
important. Its meets 90% of the public health sector needs. It
is the only one with installed capacity and generates more
than 6,000 jobs plus 50,000 related to sub-contracting and
out-sourcing. Foreign pharmaceutical companies, on theother hand, are mere importers and distributors of products
produced abroad 52. The domestic market for pharmaceutical
products in Chile amounts to almost US$ 600 million per
year compared with US$ 140 billion of the US market53.
In terms of patent applications, Chile is not a major player
particularly when compared to trademarks. According to the
Industrial Property Department, 2,400 patent applications
were filed in 2003; one third coming from US applicants and
around 13% from domestic inventors. In 1999 and 2000,
respectively, a total number of 2,814 and 3,100 patent appli-
cations were filed. Only 5% of those applications relate to
the health sector 54
. (For more details, see Annex A).Understandably, the Chilean domestic pharmaceutical indus-
try was particularly alert during the FTA negotiations and
expressed, from the outset, concerns about the introduction
in the negotiations of issues such as:
8
51Very similar language is used in Article 6.5 of the
Agreement between the European Community
and Australia on trade in wine. See
http://www.ecdel.org.au/eu_and_australia/winea-
greement/wineagreement.htm
52 ASILFA
53http//www.ims-global.com
54Classified under sectors A-61 and A-62 of the
International Patent Classification System
Box 3: Chile-EU Association Agreement
International IP treaties to which the parties are to become mem-
bers
The Parties agreed, by 1 January 2007, to accede to and ensure
an adequate and effective implementation of the obligations aris-
ing from the following multilateral conventions:
• The World Intellectual Property Organization Copyright Treaty,
WCT, 1996;• The World Intellectual Property Organization Performances and
Phonograms Treaty, WPPT, 1996;
• The Patent Cooperation Treaty, of June 19, 1970, Washington
Act amended in 1979 and modified in 1984;
• The Nice Agreement Concerning the International Classification
of Goods and Services for the Purposes of the Registration of
Marks of 15 June, 1957, Geneva Act 1977, amended in 1979;
and
• The Strasbourg Agreement Concerning the International Patent
Classification of 1971, amended in 1979.
In addition, by January 1, 2009, the Parties shall apply the fol-
lowing Conventions:
• The Convention for the Protection of Producers of Phonograms
against the Unauthorized Reproduction of their Phonograms,Geneva, 1971;
• The Locarno Agreement establishing the International
Classification for Industrial Designs, 1968, amended in 1979;
• The Budapest Treaty on the International Recognition of the
Deposit of Microorganisms for the Purposes of Patent
Procedure, of April 28, 1977, amended in 1980; and
• The Trademark Law Treaty, 1994.
A best endeavour obligationa was also included with the view to
ratify the Protocol to the Madrid Agreement Concerning the
International Registration of Marks, the Madrid Agreement con-
cerning the International Registration of Marks, Stockholm Act
1967, as amended in 1979 and the Vienna Agreement establish-
ing an International Classification of Figurative Elements of
Marks, 1973 amended in 1985.
a Article 170(d) of the Agreement between Chile and theEuropean Communities and its Members States provides that
the Parties shall “make every effort to ratify and ensure an ade-
quate and effective implementation of the obligations arising
from the following multilateral conventions at the earliest possi-
ble opportunity…”
Source: http://www.europa.eu.int/comm/external_relations/Chile/
assoc_agr/text.htm
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• Increase of patent protection term;
• Reinstatement of pipeline protection for pharmaceutical
products;
• Prohibition of parallel importation and exhaustion of
patent rights;
• Restrictions on procedural issues (e.g., elimination of
the opposition process);
• Enhancement of the protection of undisclosed informa-
tion;
• Increasing fines in case of infringement;
• Linkage between sanitary permits and the granting of
patents;
• Limitations for granting compulsory licenses; and,
• Scope of the reversal of the burden of proof in case of
process patents.
Preliminary discussions with the USA focused on the possi-
ble scope of the IP Chapter. In the earlier stages of the nego-
tiations, Chile submitted a proposal, based on Chapter 15 of
its agreement with Mexico, to the USA for consideration.The USA first presented a formal proposal in May 2001 –
five months after the negotiations started. This initial pro-
posal was complemented and amended during the course of
the negotiations.
The FTA IP Negotiating Group met for the first time in
January 2001. Reportedly, Chile from the very beginning
tried to avoid the inclusion of TRIPS-plus provisions partic-
ularly because it felt, as illustrated above, that it had inten-
sively advanced in the implementation of TRIPS and in the
signature of important international conventions in this field.
However, for the USA a trade agreement without higher
standards of protection was not an option. From the outset,
the USA indicated the areas considered to be of major con-
cern in reaching an agreement on IP matters (Box 4)55. Those
demands had no resemblance with the original Chilean pro-
posal and suggests, as reflected in the concerns advanced by
its local industry, that pharmaceutical issues were high in the
US agenda.
Interestingly, given that the FTA negotiations took place
while the USA was negotiating an agreement with Singapore,
there are some important differences between these two free
trade agreements, as discussed throughout this paper.
The final and decisive round of negotiations took place in
December 2002, where over 90 Chilean and 140 US nego-
tiators from different agencies worked for nine straight days
to conclude the Agreement. On that occasion most of the out-
standing questions were overcome, including those in the
Chapter on IP.
9
55See also Box 1, above, on the US TPA
Box 4: Original US demands in the IP
Chapter
• Better coordination between the health authorities and the
Industrial Property Department to avoid the granting of market-
ing approval to pharmaceutical products similar to pharmaceuti-
cals still under patents;
• A ban on the use of undisclosed information required to grant
marketing approval of competing or similar pharmaceutical and
agricultural chemical products;
• Implementation of an adequate system to protect undisclosed
information under Article 39.3 of the TRIPS Agreement;
• Establishment of pipeline protection for pharmaceuticals prod-
ucts;
• The patenting of transgenic plants and animals;
• Limitations in the granting on compulsory licenses;
• Limitations to the denial of patent applications based upon cer-
tain grounds such as morality, prejudice to the environment,
and diagnostic, therapeutic and surgical methods for human
and animal treatments;
• Limitations on the use of parallel importation;
• Establishment of an effective mechanism to guarantee that all
public agencies use only authorized computer programs;• Clarification of the right of reproduction with respect to tempo-
rary reproductions;
• The non-recordal of trademark licenses for their validity;
• The increase in the level of enforcement for infringement of
digital related products;
• Participation of governments in Internet Corporation for
Assigned Names and Numbers (ICANN) and adoption of the
Uniform Domain-Name Dispute-Resolution Policy (UDRP);
• The possibility of the right holder to recover profits perceived
by the infringer of copyrighted products;
• The seizure of infringing goods and of material and implements
by means of which such goods are produced; and,
• Establishment of criminal remedies to provide a deterrent to
future infringements.
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2.1 Objectives
The objectives of the FTA are principally exposed in the
Preamble to the IPRs Chapter. This Preamble, unique in
trade agreements signed by the USA, is a strange element in
the whole architecture of the Agreement. This is the only
chapter in the whole FTA that has a preamble of its own. For
example, equivalent norm-setting chapters, such as Chapter
10 dealing with investment, do not have a preamble. This
preamble might suggest an autonomous treaty on IP between
the two countries particularly because the FTA itself begins
with a general preamble that features protection of IP as one
of its important objectives. The relevant paragraph in thegeneral FTA Preamble stresses the wish to stimulate creativ-
ity and innovation and the promotion of trade in goods and
services subject to IPRs. The Preamble to Chapter 17 (Box
5) that featured in the early stages of the negotiations is more
specific and relates in general to the need to reduce distor-
tions and obstacles to trade between the Parties and that, in
this context, IP systems do not become barriers to legitimate
trade. This clause resembles a similar provision in TRIPS56.
The relevance of such a Preamble is that in case a dispute
arises it could be used as a source for interpretation of the
operative provisions of the Agreement. Since the Preamble is
not directed to establishing specific rights or obligations, it isdifficult to predict the circumstances in which its provisions
may be relied upon. Many or most FTA provisions leave
some room for interpretation, and in this sense the Preamble
may be relevant in many interpretative contexts. Some gen-
eral observations on the contents of this Preamble may help
give a general understanding of the FTA’s objectives and
principles57.
2.1.1 Reduction of distortions and impediments to
trade
The first clause of the Preamble indicates that the main objec-
tive of the Agreement is “to reduce distortions and impedi-ments to trade between the parties.” This objective is to be
accomplished, according to the second clause, by ensuring
“that measures and procedures to enforce intellectual property
rights do not themselves become barriers to legitimate trade”
and by greater efficiency and transparency in the administra-
tion of the system, as underlined by the following clause.
2.1.2 Transparency58
This transparency objective in the Preamble is further elabo-
rated in the FTA,
“Article 17.1.12: Each Party shall ensure that all laws,
regulations, and procedures concerning the protection or
enforcement of intellectual property rights, and all final
judicial decisions and administrative rulings of general
applicability pertaining to the enforcement of such rights,
shall be in writing and shall be published, or where such
10
56See first clause, Preamble, TRIPS. For the full
text of the FTA in English and Spanish see
http://www.ustr.gov/new/fta/Chile/final/. All subse-
quent quotations are taken from the final text of
the agreement
57See UNCTAD-ICTSD Resource Book , Part One,Chapter 1.1
58Note that besides these particular provisions on
transparency, Chapter 15 of the FTA also deals
with the issue and is applicable to the IPRs
Chapter
2. Objectives, temporal scope of application and
general principles
Box 5: FTA Chapter 17 Preamble
The Parties,
Desiring to reduce distortions and impediments to trade between
the Parties;
Desiring to enhance the intellectual property systems of the two
Parties to account for the latest technological developments and
to ensure that measures and procedures to enforce intellectual
property rights do not themselves become barriers to legitimate
trade;
Desiring to promote greater efficiency and transparency in the
administration of intellectual property systems of the Parties;
Desiring to build on the foundations established in existing inter-
national agreements in the field of intellectual property, including
the World Trade Organization (WTO) Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS
Agreement) and affirming the rights and obligations set forth in
the TRIPS Agreement;
Recognizing the principles set out in the Declaration on the
TRIPS Agreement on Public Health, adopted on November 14,
2001, by the WTO at the Fourth WTO Ministerial Conference,
held in Doha, Qatar;
Emphasizing that the protection and enforcement of intellectual
property rights is a fundamental principle of this Chapter that
helps promote technological innovation as well as the transfer
and dissemination of technology to the mutual advantage of
technology producers and users, and that encourages the devel-
opment of social and economic well-being;
Convinced of the importance of efforts to encourage private and
public investment for research, development, and innovation;
Recognizing that the business community of each Party should
be encouraged to participate in programs and initiatives for
research, development, innovation, and the transfer of technolo-
gy implemented by the other Party;
Recognizing the need to achieve a balance between the rights of
right holders and the legitimate interests of users and the com-
munity with regard to protected works;
Source: http://www.ustr.gov/new/fta/Chile/final/17.ipr.PDF
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publication is not practicable, made publicly available, in
a national language in such a manner as to enable the
other Party and right holders to become acquainted with
them, with the object of making the protection and
enforcement of intellectual property rights transparent.
Nothing in this paragraph shall require a Party to disclose
confidential information the disclosure of which would
impede law enforcement or otherwise be contrary to the
public interest or would prejudice the legitimate commer-
cial interests of particular enterprises, public or private”.
The transparency provision is in many respects similar to
TRIPS59. The FTA on its part clarifies in a footnote that the
requirement of publication by making a written document
available to the public via the Internet satisfies this require-
ment. The principle of transparency is a general and accept-
ed principle in international law. In the context of interna-
tional trade, transparency of national IP legislation serves the
purpose of making foreign economic operators familiar with
domestic rules on IP, thus making international transactions
in IP-related products more predictable.
The last four lines of the transparency provision in the FTA
are identical to TRIPS, which provides for the typical public
interest exception by recognizing that there are certain areas
where transparency would do more harm than good.
2.1.3 The international IP architecture
The fourth clause of the Preamble emphasizes that the FTA
builds on the foundations of the international architecture of
IP agreements, including the TRIPS Agreement “and affirm-
ing the rights and obligations set forth in the TRIPS
Agreement”. (See further discussion below concerning the
“non-derogation” clause.)
2.1.4 TRIPS and public health
The fifth clause makes a specific reference to the principles
in the Doha Declaration on TRIPS and Public Health60. This
clause is of the utmost importance because it confirms
“…that the TRIPS Agreement does not and should not
prevent Members from taking measures to protect public
health… and should be interpreted and implemented in a
manner supportive of WTO Members’ right to protect
public health and, in particular, to promote access to med-
icines for all” and also “reaffirm(s) the right of WTO
Members to use, to the full, the provisions in the TRIPS
Agreement, which provide flexibility for this purpose”.
Is then the Decision on the “Implementation of Paragraph 6
of the Doha Declaration on the TRIPS Agreement and Public
Health” adopted by General Council of the WTO of August
30th, 200361, part of the Doha Declaration on TRIPS and
Public Health and therefore of the Preamble of the IPRs
Chapter? Clearly yes: it implements one aspect of the saidDeclaration. The Decision could be considered as an integral
part of the Doha Ministerial Declaration, so in the case of
interpreting any of the provisions of the FTA, the Doha
Declaration, as well as the Decision should be taken into
account62. This general objective of the Agreement, explicit
in its Preamble, should be seen in the context of its opera-
tional provisions and, more precisely, on how the new stan-
dards incorporated in the FTA, particularly on patents and
regulated products, are made fully consistent with the Doha
Declaration.
2.1.5 Promotion of innovation, transfer and dissem-
ination of technologyThe sixth clause, while not identical, resembles the general
objectives listed in Article 7, TRIPS, by underlining that the
protection and enforcement of IPRs is a
“…fundamental principle of this Chapter that helps pro-
mote technological innovation as well as the transfer and
dissemination of technology to the mutual advantage of
technology producers and users, and that encourages the
development of social and economic well-being”.
The only formal difference with TRIPS is that a separate and
final clause stresses
“the need to achieve a balance between the rights of right
holders and the legitimate interests of users and the com-
munity with regard to protected works”.
Finally, clauses seven and eight refer to the relevance of pri-
vate and public investment and the role of the business com-
munity in research, innovation and transfer of technology.
2.1.6 Anticompetitive practices and bilateral coop-
eration
The FTA adds two more general loose objectives. The first
relates to anticompetitive practices that might be associated
to the exercise of IPRs. In this respect it recognizes that
11
59 Article 63, TRIPS: 1.“Laws and regulations, and
final judicial decisions and administrative rulings
of general application, made effective by a
Member pertaining to the subject matter of this
Agreement (the availability, scope, acquisition,
enforcement and prevention of the abuse of intel-
lectual property rights) shall be published, or where such publication is not practicable made
publicly available, in a national language, in such
a manner as to enable governments and right
holders to become acquainted with them.
Agreements concerning the subject matter of this
Agreement which are in force between the gov-
ernment or a governmental agency of a Member
and the government or a governmental agency of
another Member shall also be published.”
60For text of the Declaration,
see,http://www.wto.org/english/thewto_e/minist_e/
min01_e/mindecl_trips_e.htm
61For text of Decision, see, See
http://www.wto.org/english/tratop_e/trips_e/implem
_para6_e.htm
62In the recent US-Morocco FTA a letter has been
attached to the agreement recalling the under-
standing with the USA, concerning “the implemen-
tation of the provisions of Chapter 15 of the
Agreement [that] does not affect the ability of
either Party to take necessary measures to pro-
tect public health by promoting access to medi-
cines for all. This will concern, in particular, cases
such as HIV/AIDS, tuberculosis, malaria and other
epidemics as well as circumstances of extreme
urgency or national emergency. In the event the
provisions of Chapter 15 violate an amendmentthat has entered into force with respect to the
Parties of the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (1994) (the
TRIPS Agreement), the Parties agree to immedi-
ate cooperative consultations in order to adapt
Chapter 15 of the Agreement as appropriate in
light of the amendment to the TRIPS Agreement”.
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“Article 17.13: Nothing in this Chapter prevents a Party
from adopting measures necessary to prevent anticompet-
itive practices that may result from the abuse of the intel-
lectual property rights set forth in this Chapter.”
The wording of the FTA resembles that of NAFTA63 but fol-
lows more closely the terminology and concepts found in
TRIPS64.
Exploitation of IPRs could give rise to the possibility of anti-competitive behaviour, whether by individual firms or by
concerted practices or agreement between firms. An ade-
quate definition and implementation of public policies to
deal with this problem represents one of the most important
criteria for the efficient functioning of any IP system. In
order to prevent or control such conflicts a number of coun-
tries have enacted antitrust or other competition legislative
acts on some or most possible anticompetitive behaviour.
The approaches taken depend on the particular conditions of
national markets, national legal traditions, and on public
interest considerations. In this field, the USA has a long tra-
dition in dealing with the interface between IPRs and com-
petition policies 65. Chile, on the contrary, has incipient guide-
lines in this area66.
The relevant provisions of the TRIPS Agreement, incorpo-
rated by default in the FTA, are Article 8.2 and Article 40.
Article 8.2 is part of the “General Provisions and Basic
Principles” of Part I of the Agreement. It should be read as a
complement to the first paragraph of Article 8, authorizing
Members to adopt measures to protect public health and
nutrition, and to promote the public interest in sectors of vital
importance to their socio-economic and technological devel-
opment. Part II, Section 8, on “Control of Anti-competitive
practices in contractual licenses”, consists of Article 40.
Whereas paragraphs 1 and 2 of this provision deal with
issues of substantive law relating to anti-competitive licens-
ing practices, paragraphs 3 and 4 relate to matters of enforce-
ment67.
In brief, the FTA does not innovate in this area and leaves
Parties absolute freedom to legislate on this matter. The only
limitations might be found in the general principles of the
TRIPS Agreement, outlined above.
The FTA also refers to bilateral technical cooperation that is
crucial to enforce IPRs between countries at different stages
of development. This cooperation appears essential to
achieve real and effective results in enforcing IPRs, as are
the expressed wishes of the parties. However, there are no
effective obligations towards this end in the FTA reflecting a
rather low level of commitment to fund specific cooperation
activities. The issue was raised and discussed in the final
phases of the negotiations. It was felt that it was important to
increase technical cooperation due to the asymmetrical eco-
nomic and development conditions of the Parties.
The FTA refers to the obligations of both Parties
Article 17.1.14: to “cooperate on mutually agreed terms
and subject to the availability of appropriate funds, to
strength the development and protection of intellectual
property, and implementing the obligations contained in
the Chapter, by means of:
• educational and dissemination projects on the use of
intellectual property as a research and innovation tool as
well on the enforcement of intellectual property;
• appropriate coordinating, training, specialization cours-
es, and exchange of information between the intellectual
property offices of the Parties; and enhancing the knowl-edge, development, and implementation of the electronic
systems used for the managing of intellectual property”.
This provision has no precedent in free trade agreements,
except in CAFTA where it is linked to the Committee on
Trade Capacity Building created under the said agreement68.
2.2 Temporal scope of application
2.2.1 Entry into force
The FTA addresses the question of the entry into force of the
Agreement and the amendment of domestic legislation when
this is required by the effect of the FTA. As a matter of gen-eral principle, upon the date of entry into force of the
Agreement, each Party will give effect to the IP provisions of
the FTA. Box 6 provides details of the situations in which the
parties have provided for extra time to implement some of
their respective obligations.
The transitional provisions of the FTA have been strongly
criticized by US industry based on the unnecessarily long
transition periods provided to Chile that constitute, accord-
ing to this view, one of the “principal deficiencies of this oth-
erwise strong agreement”69. According to the same source,
Chile has gained four years from the entry into force of the
12
63 Article 1704, NAFTA: Control of Abusive or
Anticompetitive Practices or Conditions.
“Nothing in this Chapter shall prevent a Party from
specifying in its domestic law licensing practicesor conditions that may in particular cases consti-
tute an abuse of intellectual property rights having
an adverse effect on competition in the relevant
market. A Party may adopt or maintain, consis-
tent with the other provisions of this Agreement,
appropriate measures to prevent or control such
practices or conditions.”
64 Article 8.2, TRIPS, Principles: “Appropriate
measures, provided that they are consistent with
the provisions of this Agreement, may be needed
to prevent the abuse of intellectual property rights
by right holders or the resort to practices which
unreasonably restrain trade or adversely affect theinternational transfer of technology.”
65Roffe, 1998
66The Industrial Property Law (No 19039 of
24.01.24.1991), provides for example: that “Non-
voluntary licenses may only be granted where the
holder of a patent has committed a monopoly
abuse according to the Resolution Committee
established under Decree-Law No. 211 of 1973,
which shall be the body responsible for determin-
ing the existence of an offense and taking a deci-
sion thereon.”
http://clea.wipo.int/clea/lpext.dll/Infobase/1486a/14
877/14896?f=hitlist&q=chile&x=Simple&opt=&skc=
80000002402401A8640DC872000004E7&c=curr&
gh=1&2.0#LPHit1
67See UNCTAD-ICTSD, Resource Book , Part
Three
68 Article 19.4, CAFTA
69IFAC-3-Chile, p 21
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Agreement, to implement the enforcement provisions, when
it is already bound by TRIPS in many of these situations. In
addition, Chile would have two years to implement the “tem-
porary copy” requirements when providing an exclusive
right to reproduce copies in any manner or form. Again,
according to the same source, this was uncalled for because
the FTA provides only clarifications to what was already an
obligation according to the existing copyright agreements towhich Chile is a party. A similar extension seems to apply to
the implementation of Chile’s obligation to protect against
circumvention of technological protection measures, con-
tained already under the WIPO Copyright Treaty (WCT) and
WIPO Performances and Phonograms Treaty (WPPT)
(known as the WIPO Internet treaties) to which both the
USA and Chile are Parties. An open question is whether
Chile could comply with the WCT and WPPT before the
expiration of the 5-year transition (see Box 6 point 4, c); and,
only then implement the stricter provisions of the FTA.
2.2.2 Situations pre-FTA
For acts and situations that occurred before the Agreemententered into force70, the FTA acknowledges three distinctive
cases that are based on parallel principles of the TRIPS
Agreement71.
1. No obligations with respect to acts prior to the FTA
The first case refers to acts that occurred before the date of
entry into force of the FTA72. This provision is the same as
the one provided for under TRIPS (Article 70.1), but slight-
ly modified to accommodate the drafting to the specific cir-
cumstances of the FTA. There seems to be no legal differ-
ences between both provisions73. As there are no distinctions
or exceptions to which acts the provision applies to, it should
be understood that it refers to any kind of acts, in a generalsense, which occurred before January 1st, 2004, date of the
entry into force of the FTA. The issue arises about the con-
sequences of acts preceding the entry into force of the
Agreement but with lasting effects thereafter.
These continuing acts may be considered – for the part
occurring after such date of application – as acts occurring
after the date of application74, as suggested in the conclusions
and interpretation provided in the WTO Canada – Term of
Patent Protection case. The Appellate Body concluded that
the TRIPS Agreement (Article 70.1) could not be interpret-
ed to exclude existing rights, such as patent rights, even if
such rights arose through acts that occurred before the date
of application of the TRIPS Agreement for a Member. The
same rationale should also apply in the case of the FTA as
this principle of non-retroactivity is based on a similar pro-
vision of the TRIPS Agreement (Box 7).
2. Subject matter existing at the time of entry into force of
the FTA
The second case refers to all existing subject matter at the
date of entry into force of the Agreement75. The FTA gives
rise to obligations for all subject matter existing at the date
of entry into force of the Agreement and which is protected by a Party on that date, or which meets or comes subse-
quently to meet the criteria for protection under the terms of
the FTA. This provision is similar to those provided for in the
other trade agreements recently concluded by the USA.
13
70The FTA entered into force on 1 January 2004
71 Articles 70.1, 70.2 and 70.3, TRIPS
72 Article 17.9, FTA: “This Chapter does not give
rise to obligations in respect of acts that occurred
before the date of entry into force of this
Agreement.”
73It is also similar to NAFTA (Article 1720.1),
CAFTA (Article 15.1.3) and US-Morocco FTA
(Article 15.1.10. The US-Australia FTA does not
provide for such a rule, nor does the US-
Singapore FTA
74Daniel Gervais, 1998, p 268
75 Article 17.1.10, FTA
Box 6: Transitional provisions
Article 17.1
2. Before January 1, 2007, each Party shall ratify or accede to
the Patent Cooperation Treaty (1984).
3. Before January 1, 2009, each Party shall ratify or accede to:
(a) the International Convention for the Protection of New
Varieties of Plants (1991);
(b) the Trademark Law Treaty (1994);
(c) the Convention Relating to the Distribution of Programme-
Carrying Signals Transmitted by Satellite (1974).
4. Each Party shall undertake reasonable efforts to ratify or
accede to the following agreements in a manner consistent with
its domestic law:
(a) the Patent Law Treaty (2000);
(b) the Hague Agreement Concerning the International
Registration of Industrial Designs (1999); and
(c) the Protocol Relating to the Madrid Agreement Concerning
the International Registration of Marks (1989).
Article 17.12
1. Except as otherwise provided in this Chapter, each Party shall
give effect to the provisions of this Chapter upon the date of entry into force of this Agreement.
2. In those cases in which the full implementation of the obliga-
tions of the FTA requires a Party to amend its domestic legisla-
tion or additional financial resources, those amendments and
financial resources shall be in force or available as soon as prac-
ticable, and in no event later than:
(a) two years from the date of entry into force of the
Agreement, with respect to the obligations in Article 17.2 on
trademarks, Article 17.4(1) through17.4(9) on geographical
indications, Article 17.9(1), 17.9(3) through 17.9(7) on
patents, and Articles 17.5(1) and 17.6(1) on temporary copies;
(b) four years from the date of entry into force of the
Agreement, with respect to the obligations in Article 17.11 on
enforcement (including border measures), and Article 17.6(5)
with respect to the right of communication to the public, andnon-interactive digital transmissions, for performers and pro-
ducers of phonograms; and
(c) five years from the date of entry into force of FTA, with
respect to the obligations in Article 17.7(5) on effective tech-
nological measures.
Source: http://www.ustr.gov/new/fta/Chile/final/17.ipr.PDF
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Subject matter includes all that could be protected under the
different categories of IP-related rights recognized in the
FTA, i.e., inventions (patents), marks (trademarks), geo-
graphical places (GIs), literary and artistic works (copy-
right), rights of performers, producers of phonograms and
broadcasting organizations (related rights), encrypted pro-
gram-carrying satellite signals, regulated products and undis-
closed information.
The main theoretical effect of this provision, for patents, is
that it recognizes a “pipeline” protection. However, this
might not alter the legal situation in Chile because the indus-
trial property law of 1991 extended the scope of patentabili-
ty to all kind of products and processes. It might, however,
have an impact on the protection of undisclosed information
related to patented pharmaceutical and agricultural chemical
products. In effect, according to the FTA (Article 17.10.1), as
discussed below, undisclosed information concerning the
safety and efficacy of a pharmaceutical or agricultural chem-
ical product that utilizes a new chemical entity shall be pro-
tected at least for five years from the date of the approval of
a pharmaceutical product and ten years from the date of approval for an agricultural chemical product. In accordance
with the FTA undisclosed information related to these prod-
ucts, which is still protected in the USA, should also be pro-
tected in Chile.
For copyright and related rights, obligations on existing
works and phonograms are to be determined 76 by the Berne
Convention77.
A delicate issue concerns the adjustment of the term of a
patent to compensate for unreasonable delays in the granting
of the right or as result of delays in the marketing approval
process78, discussed in other sections of this paper. The ques-
tion that arises is whether a patent application submitted
before the FTA was concluded, and where the granting
process has taken more than five years from the filing date,
could benefit with the adjustment of the term because of the
FTA principle regarding “all subject matter existing at the
date of entry in force”. Or, whether the owner of a patented
pharmaceutical product who has been subject to unreason-
able curtailment of the patent term as a result of a marketing
approval in which the process started before the Agreement
was concluded, could also benefit from this principle. One
pro-protection interpretation is that if the delays continue to
exist after the entry into force of the FTA the principle under
consideration should apply.3. Non-obligation to restore protection in the public
domain
Finally, the third case79 refers to the non-obligation to restore
protection to subject matter, which on the date of entry into
14
76 Article 17.7.7, FTA
77 Article 18, Berne, by operation of Article 70.2,
TRIPS
78 Article 17.9.6 and 17.10.2(a), FTA
79 Article 17.1.11, FTA
Box 7: The Canada – Term of Patent
Protection case at the WTO
The Panel in this case was established to consider claims made
by the USA about the term of patent protection provided in
Canada’s Patent Act which the USA considered as being incon-
sistent with Canada’s obligations under the TRIPS Agreement.
The measure at issue in this dispute was Section 45 of Canada’s
Patent Act under which, before 1 October 1989, Canada provid-
ed patent protection for a term of 17 years from the date of grant
of a patent. Canada amended the law, with effect from 1
October 1989, to provide patent protection for a term of 20 years
from the date of filing of the application for a patent. However,
no mechanism was provided in the legislation to allow for con-
version from one system to the other. Consequently, Section 44
of the Patent Act established the new rule for applications filed
after 1 October 1989, while Section 45 maintained the seventeen
year grant rule for patent applications filed before 1 October
1989, thus two terms of protection co-existed. Canada stated
that the “non-retroactive application rule” contained in Article
70.1 of the TRIPS Agreement, with respect to “acts” which
occurred prior to the date of application of the TRIPS
Agreement, does not override the rule in Article 70.2 of the same
Agreement, with respect to existing “subject matter” which was
protected on the date of application of the TRIPS Agreement.
Canada also appealed the Panel’s conclusion that Canada is
required to apply the obligation under Article 33 to inventions,
which, on 1 January 1996, the date of application of the TRIPS
Agreement for Canada, were protected by patents, even though
these patents were the result of “acts that occurred prior to 1
January 1996.” In Addition, Canada relied on Article 28 of the
Vienna Convention on the Law of Treaties (VCLT), which pro-
vides that a treaty’s provisions do not operate to bind a party in
relation to any act, fact, or situation that pre-dates the treaty’s
entry into force for that party. In Canada’s view, Article 70.1 of
the TRIPS Agreement confirmed the non-retroactivity rule of
Article 28 of the VCLT.
The Appellate Body rejected Canada’s arguments by ruling that
“…as the protection accorded under Old Act patents in
respect of inventions is a “situation which has not ceased to
exist” at the date of application of the TRIPS Agreement for Canada, this situation cannot be related to “acts which
occurred” before that date and thereby brought within the
scope of Article 70.1 of the TRIPS Agreement.”
The Appellate Body also stated that an “act” is something that is
“done”, and the use of the phrase “acts which occurred” under
Article 70.1 of the TRIPS Agreement, suggests that what was
done is now complete or ended. This should exclude situations,
including existing rights and obligations that have not ended.
“The title of Article 70, “Protection of Existing Subject Matter”,
confirms contextually that the focus of Article 70 is on bringing
within the scope of the TRIPS Agreement “subject matter”
which, on the date of the application of the Agreement for a
Member, is existing and which meets the relevant criteria for
protection under the Agreement. A contrary interpretation
would seriously erode the scope of the other provisions of Article 70, especially the explicit provisions of Article 70.2.”
Source: WTO, Canada – Term of Patent Protection, see
http://www.wto.org
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force of the FTA has fallen into the public domain. This case
should mainly have an effect on artistic and literary works,
which have fallen into the public domain, but where the term
of protection has been less than 70 years 80.
2.3 General principles
2.3.1 Minimum standards
The first provision in Chapter 17 lays down the principle of
minimum standards. It states that
17.1.1: “Each Party shall give effect to the provisions of
this Chapter and may, but shall not be obliged to imple-
ment in its domestic law more extensive protection than is
required by this Chapter, provided that such protection
does not contravene the provisions of this Chapter.”
The provision in the FTA resembles word-by-word the
TRIPS Agreement81. However, the FTA does not include an
important phrase in TRIPS acknowledging that Members
shall be free to determine the appropriate method of imple-
menting the provisions of this Agreement within their own
legal system and practice. Note that:
• The requirement to implement an international agree-
ment is implicit in the obligation to perform it in good
faith. The obligation to perform in good faith (“ pacta
sunt servanda”) is recognized in the Vienna Convention
on the Law of Treaties (VCLT)82 and by customary inter-
national law. The FTA provides that Members will “give
effect to the provisions” of the Agreement, restating the
basic international legal obligation83.
• The FTA reaffirms the minimum standards principle that
the Parties may, but need not, adopt more extensive pro-
tection of IP than is required by the FTA. In fact, the
FTA goes beyond the minimum standards provided in
TRIPS. This by itself is perfectly consistent with TRIPS,
which left members with the freedom of adopting high-
er standards of protection, precisely on grounds of the
minimum standard principle.
• However, as pointed out earlier, the FTA does not make
reference to the “freedom of implementation method”
recognized under TRIPS. In TRIPS each WTO Member
decides whether it will adopt specific statutes or admin-
istrative rules for its implementation, or instead rely on
the text of the Agreement as if it was part of national law.
More importantly, TRIPS authorizes each Member to
implement the rules in the manner it deems most appro-
priate, provided that implementation is in accord with
the terms of the agreement. For the FTA it will be
important to consider, in the light of the non-derogation
principle, discussed subsequently, whether the Parties
retain the “freedom of implementation” principle
referred to above. One simple explanation for the omis-
sion in the FTA of this important principle of TRIPS is
that the FTA, as described in different sections of this
paper, sets forth specific modalities for the implementa-
tion of some of its provisions, without much freedom for
the Parties to decide on its method of implementation 84.
2.3.2 Non-derogation clause
An important principle of the FTA that governs the way it
should be interpreted states that
17.1.5: “Nothing in this Chapter concerning intellectual
property rights shall derogate from the obligations and
rights of one Party with respect to the other by virtue of the
TRIPS Agreement or multilateral intellectual propertyagreements concluded or administered under the auspices
of the World Intellectual Property Organization (WIPO).” 85
This non-derogation principle is the first to appear in the
trade agreements signed by the USA. It is neither under the
NAFTA, nor in the US agreements with Jordan, Singapore or
Australia, but it was included in CAFTA86.
TRIPS87 has a similar provision by referring to existing “obli-
gations”, not “rights”, with respect to treaties administered
by WIPO. As has been noted elsewhere88, the purpose of this
provision is to make sure that parties to these agreements do
not take the TRIPS Agreement as an excuse to no longer
respect their non-WTO commitments where those go beyondthe TRIPS minimum standards. In the WTO EC-Bananas
case, the arbitration award concerning, inter alia, the level of
suspension of concessions applied to the EC, also referred to
Article 2.2, TRIPS. In this respect, the arbitrators’ panel said:
“This provision can be understood to refer to the obliga-
tions that the contracting parties of the Paris, Berne and
Rome Conventions and the IPIC Treaty, who are also
WTO Members, have between themselves under these
four treaties. This would mean that, by virtue of the con-
clusion of the WTO Agreement, e.g. Berne Union mem-
15
80 A similar provision, with some exceptions,
appears under NAFTA (Article 1720.3), US-
Australia FTA (Article 17.1.9) (without exceptions),
CAFTA (Article 15.1.2) (without exceptions) and
US-Singapore FTA (Article 16.1.6(b)) (withoutexceptions)
81 Article 1,TRIPS, provides: “Members shall give
effect to the provisions of this Agreement.
Members may, but shall not be obliged to, imple-
ment in their law more extensive protection than is
required by this Agreement, provided that such
protection does not contravene the provisions of
this Agreement. Members shall be free to deter-
mine the appropriate method of implementing the
provisions of this Agreement within their own legal
system and practice.”
82See Article 26, Vienna Convention on the Law of
Treaties (VCLT)
83See UNCTAD-ICTSD Resource Book , Part One,
Chapter 1.2
84See relevant discussion, below, on IPRs enforce-
ment
85There are 23 agreements concluded or adminis-
tered under the auspices of WIPO on IP-relatedmatters. The texts of all these treaties are avail-
able at: http://www.wipo.int/treaties/en/index.html
86In CAFTA, the reference to treaties concluded or
administered under the auspices of WIPO is limit-
ed to those which both States are Party (see
Article 15.1.6)
87 Article 2.2, TRIPS,: “Nothing in Parts I to IV of
this Agreement shall derogate from existing obli-
gations that Members may have to each other
under the Paris Convention, the Berne
Convention, the Rome Convention and the Treaty
on Intellectual Property in Respect of Integrated
Circuits.”
88See UNCTAD-ICTSD Resource Book , Part One,
Chapter 1.3
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bers cannot derogate from existing obligations between
each other under the Berne Convention. For example, the
fact that Article 9.1 of the TRIPS Agreement incorporates
into that Agreement Articles 1-21 of the Berne
Convention with the exception of Article 6bis does not
mean that Berne Union members would henceforth be
exonerated from this obligation to guarantee moral rights
under the Berne Convention.”
89
On the reference to “rights” – and not only “obligations” – in
the FTA, the first time that a similar reference appears in the
context of IPRs agreements, is in the WIPO Patent Law
Treaty (PLT)90 :
Article 15(2): “(a) Nothing in this Treaty shall derogate
from the obligations that Contracting Parties have to each
other under the Paris Convention. (b) Nothing in this
Treaty shall derogate from rights that applicants and own-
ers enjoy under the Paris Convention.”
Note, however, that the reference to “rights” is made in a dif-
ferent context to that of the FTA. The non-derogation princi-
ple in the PLT refers to rights of patent applicants and own-ers, but not to Parties to a treaty as in the case of the FTA.
How should this non-derogation principle be understood?
What is its scope?
During the Uruguay Round the relationship between the
TRIPS Agreement and some of WIPO’s Conventions (main-
ly the Paris, Berne and Rome Conventions) was largely dis-
cussed. The principle in the FTA seems to go beyond the
TRIPS Agreement91 and creates an even more complex web
of interrelationships between the rights and obligations con-
tained in the FTA and the rights and obligations in TRIPS
and those concluded or administered under the auspices of WIPO.
As noted, the non-derogation principle in the FTA has a
broader scope than TRIPS. According to informal sources,
initially, the drafting of this principle was similar to that of
the TRIPS Agreement92. Thus, it was limited to “obligations”
deriving from the Paris, the Berne and the Rome
Conventions and the Treaty on Integrated Circuits. During
the negotiations the formulation was modified as to include
all other WIPO conventions as well as the TRIPS
Agreement.
In brief, the non-derogation principle in the FTA:
• Extends to all matters related to IP and not only to Parts
I to IV of the TRIPS Agreement dealing with general pro-
visions and basic principles, standards concerning the
availability, scope and use of IPRs, enforcement of IPRs
and acquisition and maintenance of IPRs and related inter
partes procedures.
• Is extended to “rights” and not only to obligations as in
the equivalent provision in the TRIPS Agreement.• Applies, in addition to the TRIPS Agreement, to the
“multilateral intellectual property agreements concluded
or administered under the auspices of the World
Intellectual Property Organization.” Several questions
might arise regarding this latter phrase. Which are the
“multilateral”93 treaties concluded or administered under
the auspices of WIPO? Does this include treaties that are
administered jointly by WIPO and other international
organizations such as the Rome Convention? Is the UPOV
Convention included? Should treaties not yet in force be
included? It is difficult to provide at this stage a clear
answer to these questions, but it appears to be limited toall WIPO treaties to which both countries are Parties.94
• Aims at the non-derogation of any right or obligation,
deriving from the said international treaties of a Party with
respect to the other. Unless otherwise provided for in the
FTA, the non-derogation principle should permit the
Parties to preserve all rights and obligations referred to in
the TRIPS Agreement and in present and future conven-
tions concluded or administered under the auspices of
WIPO to which both the USA and Chile are Parties. Thus,
for example, limitations provided under the TRIPS
Agreement on the granting of compulsory licences, not
explicitly referred to in this chapter of the FTA, are pre-
served, consistent with other provisions of the Agreement,
as discussed in this study. The reaffirmation that compul-
sory licensing is preserved is the reference made to Article
31, TRIPS, in the FTA Chapter on investment.95
• Appears to have “at least some potential utility from a
dispute settlement standpoint.”96
2.3.3 National treatment and most-favoured nation
principles
National treatment and the most-favoured nation (MFN) are fun-
damental principles of the international trading legal system,
including the TRIPS Agreement. How do they apply to the FTA?
16
89See European Communities – Regime for the
Importation, Sale and Distribution of Bananas,WT/DS27/ARB/ECU, cited in UNCTAD-ICTSD
Resource Book, Chapter 1.3
90The Patent Law Treaty (PLT) – not yet in force –
was adopted on June 1 2000 at the Diplomatic
Conference held in Geneva on May 11 to June 2,
2000. The purpose of this instrument is to harmo-
nize formal procedures in respect to national and
regional patent applications. The treaty shall enter into force three months after ten instruments of
ratification or accession by States have been
deposited with the Director General of WIPO. As
of January 15, 2004, seven states have depositedsuch instruments for ratification or accession
91 Article 2.2, TRIPS
92 According to available information, an earlier
proposal on this matter read the same as Article
2.2 of the TRIPS Agreement. It changed in the
final phase of the negotiations
93The reference to “multilateral” treaties appearsalso rather odd. WIPO as an international organi-
zation does promote only multilateral agreements.
94This clarification was added into CAFTA (Article
15.1.7).
95 Article 31, TRIPS, is specifically mentioned by Article 10.5.3(b), FTA, with respect to the use of
performance requirements
96 Abbott, 2004, stresses that it is counterproduc-
tive to become immersed in technical legal discus-
sions of the role of non-derogation clauses in cir-
cumstances such as those presented here. The
question is not whether and how lawyers can
debate the fine points of interpretation under pub-
lic international law, but what are the underlyingpolicies of the respective governments
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1. National treatment
National treatment has been a guiding principle of trade
agreements including the General Agreement on Trade and
Tariffs of 1947 (GATT 1947). It is also a key feature of the
TRIPS Agreement, has been a fundamental aspect of WIPO
administered treaties and goes back to the Paris Convention
for the Protection of Industrial Property of 1883. For the
FTA, this principle aims at non-discrimination betweennationals of Chile and the USA on IP matters.
It seems that the USA has not followed a similar approach on
this issue in the various free trade agreements, concluded
with Jordan, Singapore, Australia and CAFTA. For instance,
the exceptions to national treatment provided for secondary
uses of phonograms by means of analogue communications
and “free over-the-radio broadcasting” appears only in the
US agreements with Australia and Chile97. In the agreement
with Singapore levies on blank tapes are expressly consid-
ered as “benefits”, but no such explanation could be found in
the other agreements.
The national treatment provision in the FTA provides that
17.1.6: “In respect of all categories of intellectual proper-
ty covered in this Chapter, each Party shall accord to per-
sons of the other Party treatment no less favourable than
it accords to its own persons with regard to the protection
and enjoyment of such intellectual property rights and any
benefits derived from such rights. With respect to second-
ary uses of phonograms by means of analogue communi-
cations and free over-the-air radio broadcasting, however,
a Party may limit the rights of the performers and produc-
ers of the other Party to the rights its persons are accord-
ed within the jurisdiction of the other Party.”
The first part of this provision draws mainly from the TRIPS
Agreement98. This means that, as in the TRIPS Agreement,
foreigners “may thus enjoy better treatment than nationals”99.
This drafting is not the same as in the original definition of
national treatment contained in Article 2 of the Paris
Convention, which refers instead to “the same” protection100.
The main formal difference between the TRIPS Agreement and
the FTA, in the first part of this provision, refers to the extent
of the national treatment principle. In the FTA, the national
treatment extends not only to “the protection” of the IPRs
included in the chapter, but also to the “enjoyment”101 of such
rights “and to any benefit derived from such rights”
102
.
The addition of these two new concepts in the FTA could
give the impression that the enjoyment of IPRs and any ben-
efits derived from such rights are not covered by the nation-
al treatment principle in the TRIPS Agreement. This does not
seem to be the case. The broad definition of “protection” pro-
vided for under footnote 3 to Article 3, TRIPS, includes mat-
ters affecting the availability, acquisition, scope, mainte-
nance and enforcement of IPRs as well as those matters
affecting the use of IPRs. Thus, one could reach the conclu-
sion that the concept of “enjoyment” of IPRs was already
included in the concept of “use” of those rights.
2. Exceptions to national treatment
In the TRIPS Agreement the national treatment principle rec-
ognizes a number of exceptions.
The first category of exceptions relates to those already pro-
vided for in the Paris, Berne and Rome Conventions and the
Washington Treaty103.
A second group of exceptions is contained in the TRIPS
Agreement itself and refers to performers, producers of
phonograms and broadcasting organizations. For these rightholders the national treatment obligation only applies to the
rights provided for under TRIPS.
A third category of exceptions, drawn almost textually from
TRIPS104, relate to those specifically referred to in the FTA.
Here the Agreement provides that
17.1.7: “Each Party may derogate from paragraph 6 in
relation to its judicial and administrative procedures,
including the designation of an address for service or the
appointment of an agent within the jurisdiction of that
Party, only where such derogations are necessary to
secure compliance with laws and regulations that are not
inconsistent with the provisions of this Chapter and where
such practices are not applied in a manner that would con-
stitute a disguised restriction on trade.”
17.1.8: “Paragraphs 6 and 7 do not apply to procedures
provided in multilateral agreements concluded under the
auspices of WIPO relating to the acquisition or mainte-
nance of intellectual property rights.”
Was it necessary to incorporate a national treatment provi-
sion in the FTA in addition to the provision of the TRIPS
Agreement?
The national treatment principle in the FTA might be justi-
fied in the sense that the intention of the Parties was clearly
17
97See USA agreements with Australia (Article
17.1.6), CAFTA (Article 15.1.8), Jordan (Article
4.3) and Singapore (Article 16.1.3)
98 Article 3, TRIPS
99Gervais, 1998, p 48
100This difference seems to have an historical
explanation in the signature of the IP agreement
between the USA and the Republic of Korea in
the late 1980’s, where the possibility for foreigners
to enjoy better treatment than nationals did exist. Article III of the GATT 1947, takes a similar
approach as it refers to a “non less favourable”
treatment meaning that imported goods may have
a better treatment than goods domestically pro-
duced. For instance, the USA requires copyrightregistration to file suit for copyright infringement of
US copyrighted works. But, because the Berne
Convention states that copyright may not be sub-
ject to any formalities, foreign works need not reg-
ister to file suit for copyright infringement.
Therefore, the USAgrants its nationals, treatment
less favourable than the one granted to foreigners
101See also Article 5.2, Berne Convention
102 According to the Black’s Law Dictionary “enjoy-
ment” means “1. Possession and use, esp. of
rights or property. 2. The exercise of a right.”
103For the Paris Convention, (Article 2) provisionsrelating to judicial or administrative procedure and
to jurisdiction and those relating to the designation
of an address for service or the appointment of an
agent, are qualified exceptions to the national
treatment principle
For further details, see WTO, Beneficiaries of and
exceptions to national treatment, pp 2-3. See
also UNCTAD-ICTSD Resource Book , Part One,
Chapter 1.4
104 Articles 3.2 and 5, TRIPS
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to limit the exceptions to national treatment that the Parties
may use, according to the Paris, Berne and Rome
Conventions, the Washington Treaty and the TRIPS
Agreement. But, if that were the case, what about the non-
derogation principle, discussed earlier, and the possibilities
of the parties to avail themselves of the limitations contained
under the TRIPS Agreement? Can those exceptions to
national treatment be considered as “rights granted to the
Parties under the TRIPS Agreement”? If the answer is yes,
then the limitations to national treatment contained under
TRIPS should not be understood as being derogated.
2.3.4 The MFN principle
National treatment, as discussed above, is a fundamental
principle of the FTA and explicitly dealt with in the
Agreement. MFN applies to third parties as a result of the
two Parties being members of the WTO and more specifical-
ly it is one of the consequences of the principle of non-dero-
gation105.
Application of a MFN standard for IPRs protection is an
innovation in the multilateral context. The TRIPS Agreement
provides for the immediate and unconditional extension to
nationals of all Members of
Article 4: “…any advantage, favour, privilege or immuni-
ty granted with respect to the protection of intellectual
property to nationals of any country.”
In the US–Havana Club case106, the WTO Appellate Body
elaborated on this by highlighting that:
“Like the national treatment obligation, the obligation to
provide most-favoured-nation treatment has long been
one of the cornerstones of the world trading system. For
more than fifty years, the obligation to provide most-favoured-nation treatment in Article I of the GATT 1994
has been both central and essential to assuring the success
of a global rules-based system for trade in goods. Unlike
the national treatment principle, there is no provision in
the Paris Convention (1967) that establishes a most-
favoured-nation obligation with respect to rights in trade-
marks or other industrial property. However, the framers
of the TRIPS Agreement decided to extend the most-
favoured-nation obligation to the protection of intellectu-
al property rights covered by that Agreement. As a cor-
nerstone of the world trading system, the most-favoured-
nation obligation must be accorded the same significance
with respect to intellectual property rights under the
TRIPS Agreement that it has long been accorded with
respect to trade in goods under the GATT. It is, in a word,
fundamental.” (at para. 297)
The TRIPS Agreement recognizes exceptions to the MFN
principle. One of these exceptions relates to any advantage,
favour, privilege or immunity deriving from internationalagreements related to the protection of IPRs entered into
force prior to the entry into force of the Agreement estab-
lishing the WTO107. Two additional conditions should be met
in this case: the said agreement shall be notified to the
WTO108 and shall not constitute “an arbitrary or unjustifiable
discrimination against nationals of other Members”109. There
is no definition of what constitutes an “arbitrary or unjustifi-
able discrimination” against nationals of other Members.
The clear meaning of this principle is that any advantage,
favour, privilege or immunity accorded by a WTO Member
to nationals of any other country (not necessarily a WTO
Member), after January 1st, 1995, needs to be immediatelyand unconditionally extended to nationals of any other WTO
Member.
As there is no definition under the TRIPS Agreement on
what constitutes an advantage, favour, privilege or immuni-
ty for the protection of IP, there is uncertainty as to what it
means exactly. In some cases it could be easily settled, for
instance in the case of the term of protection of a certain cat-
egory of IPRs; but, in non-quantitative matters the situation
could be different.
Reportedly, during the negotiations of the FTA, Chile raised
concerns on the effects of the MFN principle with respect to
TRIPS-plus provisions that would automatically be extended
to all other WTO Members. The issue was discussed in a
number of negotiating sessions but for the USA this was a
non-issue because it was negotiating on the basis of its own
domestic level of protection.
In brief, as a result of the MFN – a “cornerstone” principle
of the international trading system – the advantages, favours,
privileges or immunities contemplated in the FTA between
Chile and the USA will be accorded “immediately and
unconditionally”, in the terms prescribed in the TRIPS
Agreement, to nationals of all other WTO members.
18
105The chapters dealing with investments and serv-
ices do provide for an explicit reference to the
MFN principle. See Articles 10.3 and 11.3, FTA
106WTO, USA – Havana Club
107The TRIPS Agreement entered into force on 1
January 1995
108The 41 notifications made so far by different
WTO Members regarding Article 4(d) of the TRIPS
Agreement, are available at the WTO web site:http//www.wto.org/english/tratop_e/TRIPS_e/inte1
7_e.htm
109For some of the notifications made so far under
Article 4(d) of the TRIPS Agreement, see UNC-
TAD/ICTSD Resource Book, Part One, Chapter
1.4
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3.1 Introduction
The FTA deals with certain IP disciplines, setting standards
of protection generally higher than those in the TRIPSAgreement. The following sections describe their main fea-
tures. For other IP disciplines not dealt with explicitly in the
FTA, the standards of the TRIPS Agreement as well as of
other international IP instruments in which both Parties are
members would prevail. For instance, the FTA is silent on
industrial designs, as well as on layout-designs of integrated
circuits covered in the TRIPS Agreement. On these issues
and in the light of the principle of non-derogation, discussed
above, the standards of TRIPS prevail. Furthermore, as dis-
cussed here, the FTA not only sets higher standards of pro-
tection than in TRIPS, but also governs disciplines not cov-
ered at all by the latter, e.g., domain names, protectionagainst circumvention of effective technological protection
measures and limitations on liability of Internet Service
Providers (ISPs).
3.2 Patents and regulated products
3.2.1 Patents
The FTA patent provisions have received great attention and
criticism. In a recent article, focusing on their impact on pub-
lic health, Carlos Correa has featured the FTA as “a bad deal
for Chile”110.
How did Chile fare on these questions?Compared particularly with TRIPS, the FTA section on
patents is relatively brief. However, an important section on
regulated products complements it. The section on patents
deals mainly with issues of patentability, limited exceptions,
plant protection, revocation, and delays in their granting. The
limited, but significant, treatment of patents in the FTA is
explained by the fact that on matters not dealt with, the prin-
ciples and standards of the TRIPS Agreement govern the
relationship of the Parties on these other matters.
On the exhaustion of patent rights, the FTA is silent. The
USA has traditionally advocated for a national exhaustion
regime and in its bilateral agreements signed with Singapore,
Australia and Morocco the possibility of parallel imports
may at least be restricted by contract111.
1. Patentable subject matter and exceptions
On the important issue of patentability, the relevant FTA
principle is that
Article 17.9.1: “Each Party shall make patents available
for any invention, whether a product or a process, in all
fields of technology, provided that the invention is new,
involves an inventive step, and is capable of industrial
application. For purposes of this Article, a Party may treat
the terms “inventive step” and “capable of industrial
application” as being synonymous with the terms “non-
obvious” and “useful”, respectively.”
Article 17.9.7: “Neither Party shall use a public disclosure
to bar patentability based upon a lack of novelty or inven-
tive step if the public disclosure (a) was made or author-
ized by, or derived from, the patent applicant and (b)
occurs within 12 months prior to the date of filing of the
application in the Party.”
The FTA practically reproduces a parallel provision in the
TRIPS Agreement112 and even incorporates into the main text
its footnote. This is not the place to deal in detail with the
general requirements for patentability as spelled out in
TRIPS and reproduced in the FTA113, but to underline some
general principles related to the requirements of patentabili-
ty and pertinent to the understanding of the latter agreement.
The FTA contains the overriding requirement that patents
shall be available for all types of product and process inven-
tions. It requires making patents available for both product
and processes, and prohibits distinctions about the field of
technology to which the invention belongs. In addition, the
FTA does not explicitly obligate Parties to protect the “sec-
ond use” of a product.
Any patent application must satisfy the basic criteria of nov-
elty, inventive step and industrial applicability, without alter-
ing the criteria already explicit in TRIPS. The FTA, as in the
case of TRIPS, does not define what an “invention” is; it
only specifies the requirements that an invention should meet
to be patentable. This leaves Parties considerable freedom to
determine what should be deemed an invention and, if they
so desire, to exclude from patentability any substance which
exists in nature as being a mere “discovery” and not an
“invention”. The FTA also did not define, unlike in CAFTA,
the meaning of “industrial application”. CAFTA, importing
19
110Correa, March 2004
111See BTAs by the USA with Singapore (Article
16.7.2), Australia (Article 17.9.4) and Morocco
(Article 15.9.4)
112 Article 27.1, TRIPS: “Subject to the provisions of paragraphs 2 and 3, patents shall be available for
any inventions, whether products or processes, in
all fields of technology, provided that they are
new, involve an inventive step and are capable of
industrial application. Subject to paragraph 4 of
Article 65, paragraph 8 of Article 70 and para-
graph 3 of this Article, patents shall be available
and patent rights enjoyable without discrimination
as to the place of invention, the field of technology
and whether products are imported or locally pro-
duced.”
113For details see UNCTAD-ICTSD, Resource
Book , Part Two, Chapter 2.5
3. Substantive IP standards
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concepts from US law114, specifies that
“Each Party shall provide that a claimed invention is
industrially applicable if it has a specific, substantial, and
credible utility.”115
The FTAqualifies that novelty or inventive step is not affect-
ed by authorized public disclosure or derived from the patent
applicant, provided it occurred within 12 months prior to the
filing of the patent application116.
The FTA does not fully reproduce the relevant TRIPS provi-
sion, by omitting the reference that patents shall be available
and patent rights enjoyable without discrimination as to the
place of invention, the field of technology and whether prod-
ucts are imported or locally produced. This omission appar-
ently should have no major implication because parties are
obliged to the principles, both of non-derogation included in
the FTA and of non-discrimination of TRIPS117. What is
striking is the selective form chosen in the FTA of reproduc-
ing some TRIPS provisions but omitting others as is dis-
cussed later.
Compared to TRIPS, the relevant provision of the FTA lim-
its itself to reproduce partly the first paragraph of Article 27,
but does not include related provisions found in the former
agreement about exclusions to patentability spelled out in
Article 27.2 and 27.3118. In CAFTA, the agreement makes
specific reference to exceptions to patentability by referring
explicitly to the said provisions in the TRIPS Agreement119.
The other bilateral agreements signed by the USA have fol-
lowed various approaches120. This omission in the FTA – not
the only one, as mentioned earlier – is indeed an important
question that has no clear and definitive answer.
According to one view shared by participants in the negotia-
tions, the recourse to the exceptions explicitly provided for
in TRIPS – and not included in the FTA– is via the non-dero-
gation principle discussed above. If actually the Parties had
forgone the possibility of providing for the exceptions to
patentability, the provision on patent protection for plants,
discussed below, would be superfluous. In effect, the omis-
sion of the relevant provisions in TRIPS is partial because
the FTA deals in a separate provision with plants, but it does
not deal with the issue of protection of animals that under
TRIPS (Article 27.3.b) is subject to a facultative exemption.
Clearly in this case, the relevant provision of TRIPS applies
supporting the argument that in the cases not dealt with
explicitly in the FTA, the principles and rules of TRIPS are
not derogated.
An alternative view raises doubts about the meaning of this
omission that at least creates a great ambiguity on the issue
of exceptions to patentability121.
2. Plant protection122
Several countries legislate for the protection of plants under
the patent system. In some cases, they do not exclude plants per se as a patentable subject matter and in others by specif-
ic legislation123. Some countries provide patent protection for
all kinds of plants regardless of their method of reproduction,
while others (e.g., Republic of Korea) protect under patents
only those plants that are asexually reproduced124.
In the USA there are basically three different statutes cover-
ing the protection of plants. The first one is under the Utility
Patent Act (Title 35 U.S.C § 101) where the protectable sub-
ject matter is any invention (product or process), which
meets the criteria of novelty, non-obviousness, utility, and
disclosure. The second one relates to the Plant Patent Act
(Title 35 U.S.C. § 161) that grants protection to any distinct
20
114US Patent and Trademark Office Guidelines pro-
vide that an invention must disclose a specific,
substantial, and credible utility
115Morin, 2004
116 According to Morin, 2004, “The United States is
one of the few countries that offer a grace period
of twelve months prior to the filing of a patent
application during which an inventor can use, selland disclose his or her invention without compro-
mising its ’novelty’”
117Morin, 2004, explains this omission also present
in CAFTA as follows: “One possible explanation
resides in the fact that US law contains severalmeasures that could be considered de facto or de
jure discriminatory by an international panel of
arbitration. These include the procedures of the
US International Trade Commission pertaining toforeign inventions; the fast-track examination pro-
cedures for biotechnologies; the exclusion of oral
communication outside the United States in con-
sidering prior art; and the exceptional rights grant-
ed to pharmaceutical inventions.”
118 Article 27.2, TRIPS: Members may exclude
from patentability inventions, the prevention within
their territory of the commercial exploitation of
which is necessary to protect ordre public or
morality, including to protect human, animal or
plant life or health or to avoid serious prejudice to
the environment, provided that such exclusion is
not made merely because the exploitation is pro-
hibited by their law
Article 27.3, TRIPS: Members may also exclude
from patentability:
(a) diagnostic, therapeutic and surgical methodsfor the treatment of humans or animals;
(b) plants and animals other than micro-organ-
isms, and essentially biological processes for the
production of plants or animals other than non-
biological and microbiological processes.However, Members shall provide for the protection
of plant varieties either by patents or by an effec-
tive sui generis system or by any combination
thereof. The provisions of this subparagraph shallbe reviewed four years after the date of entry into
force of the WTO Agreement.”
119 Article 15.9.2, CAFTA: “Nothing in this Chapter
precludes a Party from excluding inventions from
patentability as defined in Articles 27.2 and 27.3
of the TRIPS Agreement. Notwithstanding the
foregoing, any Party that does not provide patent
protection for plants by the date of entry into force
of this Agreement shall undertake all reasonable
efforts to make such patent protection available.
Any Party that provides patent protection for
plants or animals as of, or after, the date of entry
into force of this Agreement shall maintain such
protection.”
120For example, the agreements with Jordan,
Singapore and Australia allow only for the excep-
tions in Article 27.2 and 3(a), TRIPS, thus exclud-
ing the exceptions for plants and animals. TheMorocco agreement in an ambiguous formulation
allows for the exception in Article 27.2 and is
silent on Article 27.3(a), TRIPS. It further provides
for the protection of plants and animals throughpatents. Furthermore, the latter agreement pro-
vides that “patents shall be available for any new
uses or methods of using a known product,
including new uses of a known product for the
treatment of humans and animals”
121Correa, March 2004
122Van Overwalle, 1999
123See the WTO series IP/C/W/125 and addenda 1
to 24,“Review of the Application of Article 27.3(b)
of the TRIPS Agreement.”
124In the USA, patent protection for plants asexual-
ly reproduced is contained under section 161 of Title 35 of the US Code
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and new asexually reproduced plant including hybrids and
newly found seedlings. Finally, the third system corresponds
to the Plant Variety Protection Act (Title 7 U.S.C § 2327),
which protects novel sexually reproduced plant varieties if
they posses distinctness, uniformity and stability.
Chile protects plants through a sui generis system125 based
mainly on the International Union for the Protection of New
Varieties of Plants (UPOV) Convention126
, as revised in1978; but, under the FTA, Chile committed to adhere to the
1991 Act of UPOV by 1 January 2009.
The FTA does not contain an explicit obligation to protect
plants under the patent system. But, it provides for a “best
effort” clause in order for each Party to undertake reasonable
efforts, through a transparent and participatory process, to
develop and propose legislation – within four years from the
entry into force of the Agreement – to make available patent
protection for plants which are new, involve an inventive
step, and are capable of industrial application127. This provi-
sion does not contain any limitation on the type of plants that
should be protected under the patent system (sexually and/or asexually reproduced). According to this obligation, that in
practice applies only to Chile, the latter is not obliged to con-
sider plants as a patentable subject matter, but to engage in a
process to legislate to that effect.
During the negotiations, Chile resisted changing its current
system to allow for the patentability of plants before under-
taking a thorough study of the issue. The result was the
ambiguous outcome reflected in this provision. This “best
endeavour” obligation would seem to end when the proposed
legislation is submitted to the competent authorities. It is the
view of participants in the negotiations, that in case the pro-
posed legislation fails to materialize the relevant provisions
of the TRIPS Agreement should continue governing the situ-
ation. This does not answer the question of the possible con-
sequences for Chile, in its bilateral relations with the USA,
of failing to pass this legislation. In any event, Chile in its
current system is TRIPS compatible.
A comparison of the FTA with other trade agreements signed
by the USA shows that in the NAFTA – in a similar provi-
sion to TRIPS – plants and animals may be excluded from
patentability128. Similar provisions are contemplated under
the CAFTA and Singapore agreements. Nevertheless, in
CAFTA any Party that does not provide patent protection for
plants by the date of entry into force of the Agreement shall
undertake all reasonable efforts to make such patent protec-tion available. In addition, according to the same agreement,
any Party that provides patent protection for plants and ani-
mals as of, or after, the date of entry into force of the
Agreement shall maintain such protection.
3. Limited exceptions
The FTA, replicating the TRIPS Agreement129, states
Article 17.9.3: “Each Party may provide limited excep-
tions to the exclusive rights conferred by a patent, provid-
ed that such exceptions do not unreasonably conflict with
a normal exploitation of the patent and do not unreason-
ably prejudice the legitimate interests of the patent owner,
taking account of the legitimate interests of third parties.”
Patents confer an “exclusive” right, that is, the right to pre-
vent others from using the invention, without the authoriza-
tion of the patent holder. The market power conferred by
patents, and the important benefits the patent owner may
obtain, constitute one of the essential elements of patent
grants. However, the conferred rights are not absolute. Under
most patent laws, such rights may not be exercised over cer-
tain acts performed by third parties. This means that under
certain specified circumstances, there may be exceptions to
the exclusive rights. These exceptions should not be con-
fused with the exceptions to patentability, alluded to earlier when discussing the issue of patentability. The limited
exceptions discussed here apply when a patent has already
been granted.
Exceptions to patent rights operate automatically, in the
sense that there is no need for a party to obtain a specific
authorization from a governmental body or judicial court –
which is necessary for compulsory licences – to perform the
exempted act. As a result, the exceptions may be invoked as
a defence in case of alleged infringement by any third party,
at any time during the lifetime of the patent130.
The FTAallows for the establishment of exceptions to patent
rights, but imposes conditions on such exceptions. As in the
case of TRIPS, exceptions to patent rights are subject to three
conditions:
• the exception must be “limited”131;
• the exception should “not unreasonably conflict with the
normal exploitation” of the patent; and,
• the exception should “not unreasonably prejudice the
legitimate interests” of the right holder and of third par-
ties.
In Canada-Patent Protection of Pharmaceutical Products
(Box 7) the WTO panel was of the view that these conditions
are “cumulative, each being a separate and independentrequirement that must be satisfied. Failure to comply with
any one of the three conditions results in the Article 30
exception being disallowed”. The panel added that:
21
125See Chilean Law 19.342 which Regulates
Rights of Plants Breeders Rights
126International Union for the Protection of New
Varieties of Plants (UPOV), (established by the
International Convention for the Protection of New
Varieties of Plants), is an independent intergov-
ernmental organization, was signed in 1961 and
revised at Geneva in 1972, 1978 and 1991
127 Article 17.9.3, FTA
128 Article 1709.3(b), NAFTA
129 Article 30, TRIPS
130See UNCTAD-ICTSD, Resource Book , Part
Two, Chapter 2.5
131This language, substantially borrowed by the
TRIPS Agreement from Article 9 (2) of the Berne
Convention, requires a determination of what is
“unreasonable” in certain circumstances and when
there is a “conflict” with the “normal” exploitation
of a patent. See also discussion in this study
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“The three conditions must, of course, be interpreted in
relation to each other. Each of the three must be presumed
to mean something different from the other two, or else
there would be redundancy. Normally, the order of listing
can be read to suggest that an exception that complies
with the first condition can nevertheless violate the sec-
ond or third, and that one which complies with the first
and second can still violate the third. The syntax of
Article 30 supports the conclusion that an exception may
be ‘limited’ and yet fail to satisfy one or both of the other
two conditions. The ordering further suggests that an
exception that does not ‘unreasonably conflict with nor-
mal exploitation’ could nonetheless “unreasonably preju-
dice the legitimate interests of the patent owner”132.
One of the typical exceptions falling under this category is
the “Bolar” type of exception, discussed below.
4. Revocation
Among its very selected patent provisions, the FTA deals
with revocation or cancellation of patents:
Article 17.9.5: “A Party may revoke or cancel a patent
only when grounds exist that would have justified a
refusal to grant the patent.”
Apparently, the only causes for revocation or cancellation of
a patent would be that the patent was not new, obvious or not
useful. A footnote clarifies that fraud in obtaining the patent
may also be cause for revocation. One should ask if these are
the only causes for revocation or if the Parties would be
allowed to establish different grounds for such cancellation,
such as inequitable conduct133 or misrepresentation. In fact,
other trade agreements have been more liberal and have
broadened the causes for revocation recognized in the FTA.
For instance, the US agreements with CAFTA134 andAustralia allow for these other two causes of revocation,
while the agreement with Singapore went even further by
providing that the patent may be revoked, besides for fraud
and misrepresentation, on grounds that pertain to the insuffi-
ciency of or unauthorized amendments to the patent specifi-
cation, or nondisclosure of the invention.
A related issue that might arise is whether Parties may refuse
a patent on other grounds than the requirements of
patentability spelled out in the TRIPS Agreement and repro-
duced in the FTA. For example, are the Parties free to pro-
vide in their patent laws that when a patent is filed, the appli-
cant must disclose the origin of the genetic resources related
to the invention? Or, the prior and informed consent of the
owners of the genetic resources? These are important ques-
tions as countries are discussing whether the principles of the
Convention on Biological Diversity are TRIPS compatible
and should be incorporated in domestic patent laws. At least
there are no specific and express provisions in the FTA
excluding the establishment of such requirements.
In addition, the TRIPS Agreement (Article 29) does not
exclude these possibilities of establishing the requirement for
disclosure by allowing members to request applicants to
indicate the best mode for carrying out the invention.
Correa criticizes the revocation provision in the FTA, among
others, because it might further restrict the authority recog-
nized in the Paris Convention for the forfeiture of the patent
in cases where the grant of compulsory licenses would not
have been sufficient to prevent abuses that might result fromthe exercise of the exclusive rights conferred by the patent or
for lack of payment of annual fees135. There are no provisions
in the FTA that prevent Parties from granting compulsory
licences in accordance with Article 31, TRIPS. A separate
issue relates to the manner in which the granting of compul-
sory licenses might be conditioned by other provisions of the
FTA, as discussed in other sections of this study.
In brief, the FTA leaves more questions open than clear
answers to the standards that should prevail on issues related
to revocation and cancellation of patents.
5. Delays in the granting of patents
The FTAprovides for an extension of the patent term to com- pensate for unreasonable delays in granting the patent:
Article 17.9: “Each Party shall provide for the adjustment
of the term of a patent, at the request of the patent owner,
to compensate for unreasonable delays that occur in grant-
ing the patent. For the purposes of this paragraph, an
unreasonable delay shall be understood to include a delay
in the issuance of the patent of more than five years from
the date of filing of the application in the Party, or three
22
132Para 7.21. The report of the drafting committee
for Article 9(2) of the Berne Convention, fromwhich this text was derived, concluded that meas-
ures not in conflict with "normal exploitation" couldnonetheless prejudice the "legitimate interests" of
the copyright owner. The report is quoted in para.
7.72 of the EC-Canada panel’s report.
133 Although the penalty for inequitable conduct in
the USA renders the patent unenforceable, courts
have found that cases of inequitable conduct (e.g.
submarine patenting) may provide grounds for an
antitrust claim against the patent right holder. See
Discovision Assoc. v. Disc Mfg. Inc, 42 U.S.P.Q.2d1749 (D. Del. 1997) and Merges et al, 2000
134 Article 15.9.4, CAFTA: “Without prejudice to
Article 5.A(3) of the Paris Convention for the
Protection of Industrial Property (1967), eachParty shall provide that a patent may be revoked
or cancelled only on grounds that would have jus-tified a refusal to grant the patent. However, a
Party may also provide that fraud, misrepresenta-
tion, or inequitable conduct may be the basis for
revoking, canceling, or holding a patent unen-
forceable.” The US industry reacted to this provi-
sion in the following terms: “CAFTA restricts, in
Article 15.9.4, the grounds for the revocation of a
patent to those limited to the patentability of the
invention. Notwithstanding that IFAC-3 is disap-
pointed that it does not require CAFTA countriesto also provide that fraud, misrepresentation or
inequitable conduct may be the basis for revoking,
canceling or holding a patent unenforceable, it
urges the U.S. Government to work with theCAFTA governments in the implementation of this
provision to ensure that it is consistent with U.S.practice. For example, the possibility of prevent-
ing enforcement of a patent due to actions that
are found to constitute inequitable conduct should
be limited to acts that are material to the
patentability of the invention. Since CAFTA coun-
tries are already members of the Paris
Convention, IFAC-3 notes that the reference to
the obligations contained in Article 5.A (3) of the
Paris Convention does not add or detract from the
obligation contained in the FTA Article 15.9.4.”See IFAC-3-CAFTA.
135Correa, March 2004
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years after a request for examination of the application has
been made, whichever is later, provided that periods of
time attributable to actions of the patent applicant need
not be included in the determination of such delays.”
This provision has its origins in the US Drug Price
Competition and Patent Term Restoration Act of 1984
(Hatch–Waxman Act), which together with granting an
extension of the patent term for administrative delays in theFDA, awarded extensions for delays during the granting of
the patent136.
A closer examination of the FTA provision on adjustment of
the term of a patent suggests:
• The FTA does not provide for an automatic extension of
the term of the patent due to unreasonable delays. The
adjustment of the term will be made only after the patent
owner makes a request to that effect.
• The FTA provides that an unreasonable delay shall be
understood to include a delay of more than five years
from the filing of the patent or three years after a request
for examination of the application. This means that if less
than five years pass between the filing or the request for
examination and the granting of the patent, there will be
no extensions. Only at the end of the fifth or third year,
as the case may be, will the delay start to be counted.
• The periods of time attributable to actions of the patent
applicant need not be included in the determination of
such delays. So, at the end of the fifth year after filing or
at the third year after the request for examination of the
patent, the Parties are allowed to deduct the delays that
may be attributed to the patent owner.
• According to Chilean sources, the five and three years
could be explained by the process of approval of a phar-
maceutical patent in Chile which lasts, on average, less
than 5 years, including actions by the applicant. Thus,
according to these sources, the extension of the term of
the patent would in practice rarely apply.
• Although the immediate antecedent of this provision on
term adjustment is the Hatch–Waxman Act, in the case
of the FTA it applies to all kinds of inventions. Its place
in the Agreement is under the provisions dealing with
patents in general; so one should ask whether the Parties
are allowed to extend the term of protection only to cer-
tain kinds of products, as is the current situation in the
US law. The Hatch-Waxman Act limits the extension
“to patents on products (or processes of making or
using the same) that are human drug products, medical
devices, food additives, and colour additives subject to
regulation under the Food and Drug
Administration”137.
• The FTA provides that the patent owner shall be com-
pensated for delays, but it says nothing about how the
compensation will be computed or the limitations that
such compensation would have. Would it mean an
equivalent time to offset that lost for the actual delays in
the approval process or any other system of indemnity?The FTA does not provide either for limitations to the
extra time to be awarded as compensation. In the US law
the restoration period is limited to five years.
• As discussed elsewhere in this paper, the patent term
may also be extended to compensate for “unreasonable
curtailment of the patent term as a result of the market-
ing approval process”. At least in the USA there is a
close relation between both extension terms (e.g. “the
effective patent term including the restoration period
may not exceed 14 years138 following FDA approval of
the new drug.”)139. In the case of Chile, this calls for
appropriate domestic regulations.
• Free trade agreements signed by the USA have similar
provisions to those of the FTA, the only variation being
the years to be considered as unreasonable delay. Instead
of five and three years, respectively, as in the FTA, the
US agreements with Singapore and Australia refer to
four and two years, respectively, while CAFTA is iden-
tical to the FTA140.
6. Regulatory exemption
As part of the limited exceptions to the exclusive rights of
the right holder, discussed above, the FTA permits Parties to
make use of what is known as the “Bolar Exemption” or
“Regulatory exemption” under some conditions
Article 17.9.4: “If a Party permits the use by a third party
of the subject matter of a subsisting patent to support an
application for marketing approval or sanitary permit of a
pharmaceutical product, the Party shall provide that any
product produced under such authority shall not be made,
used, or sold in the territory of the Party other than for
purposes related to meeting requirements for marketing
approval or the sanitary permit, and if export is permitted,
the product shall only be exported outside the territory of
the Party for purposes of meeting requirements for issuing
marketing approval or sanitary permits in the exporting
Party.”
The purpose of the Bolar exemption is to accelerate the intro-
duction of generic medicines into the market, as soon as the
term of protection of the patent of an original drug expires. It
allows the generic competitor to manufacture the drug dur-
23
136Title 35 U.S.C. § 156
137Chisum, 2001, § 16.04[5] (1997)
138Title 35 U.S.C. § 156(c)(3)
139See Chisum, 2001, p 1210, on Merck & Co.,
Inc. v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir.
1996). See Chisum. Merck also pointed out that
“If the term of the patent has received such an
extension, the patent may not be given another
restoration extension even for another drug cov-ered by the patent whose marketing also is
delayed by reasons of FDA procedures.”
140In the case of the US-Singapore FTA there is
another provision regarding a five-year extension
of the patent term when a patent is granted based
on the examination conducted in another country.The extension will be awarded when at the same
time it has been awarded in the other country
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ing the patent term protection, without considering this as an
infringement of the patent. Otherwise, the generic producer
would have to wait until the patent expires to produce the
copy, and just then ask for the approval of the drug by the
health authorities. This would amount to a de facto extension
of the patent term, as the competing drugs would have to
wait for a number of years to make it into the market.
The Bolar exception has its origin in US law. In fact, the pro-visions of the US law where enacted after the Federal Circuit
Court considered that a generic manufacturer had infringed
upon a valid patent when it imported the patented drug and
began testing it, even if it was testing it only to obtain the
sanitary permit from the Food and Drug Administration
(FDA)141. Thus, US Congress responded by enacting the
Hatch-Waxman Act142, which sanctions this exemption143.
There is no equivalent provision in the Chilean law that
allows for this exemption144. The Bolar provision clarifies or
establishes an exemption that has turned into common prac-
tice in many countries seeking to facilitate access to medi-
cines and enhance competition in this area.
There are two aspects to the FTA provision dealing with this
matter. One allows a third party to use the subject matter of
a patent for purposes of obtaining the sanitary permit or mar-
keting approval of a pharmaceutical product. The other
allows the third party to use the subject matter of a patent
when the product will be exported, but only to meet require-
ments for issuing marketing approval or sanitary permits in
the exporting party.
The FTA appears in some sense to reflect the discretion rec-
ognized for WTO Members in the dispute settlement Panel
in Canada –Patent Protection of Pharmaceutical Products145.
3.2.2 Regulated products
Together with the provision on the adjustment of the patent
term of protection to compensate for unreasonable delays,
examined above, the measures on certain regulated products
are, without doubt, one of the most controversial areas of the
FTA IP Chapter. This section of the FTA deals mainly with
the protection and possible use of undisclosed information
concerning the safety and efficacy of pharmaceutical and
agricultural chemical products which utilize a new chemical
entity, so called regulated products.
Since the NAFTA146 negotiations, the USA has been con-
cerned with special provisions for agricultural chemical and
pharmaceutical products. In NAFTA, the provisions apply to
“undisclosed test or other data” necessary to determine safe-
ty and efficacy of “products that utilize new chemical enti-
ties” the origination of which “involves considerable effort”.
No person other than the one that has submitted the data may
rely on such data to support an application for the marketing
approval of the product concerned, during a reasonable peri-
od of time, of no less than 5 and 10 years.
The USA has not followed the same approach to this matter
with its different trade partners (Box 8). With Chile, the issue
of regulated products was a controversial matter during the
entire negotiations and was the subject of intense discussions
during the second half of the negotiations. The political and
economic implications of these questions were discussed
earlier in this study. In Chile, representatives from foreign
and domestic laboratories were unable to reach any agreed
solution on how to deal with this sensitive issue despite the
mediation efforts of government officials. Reportedly, in the
final phase of the negotiations the international research- based pharmaceutical industry put great effort and pressure
to reach a favourable outcome reflecting their original con-
cerns on this important topic.
Initial US proposals, according to Chilean sources, were
more complex and contained a broader scope of additional
protection for pharmaceutical products than those finally
negotiated and incorporated in the FTA. Chile introduced
important limitations to this provision in the final steps of the
negotiations.
1. Protection of undisclosed information
The first part of the relevant FTA provision states that
Article 17.10.1: “If a Party requires the submission of
undisclosed information concerning the safety and effica-
cy of a pharmaceutical or agricultural chemical product
which utilizes a new chemical entity, which product has
not been yet previously approved, to grant a marketing
approval or sanitary permit for such product, the Party
shall not permit third parties not having the consent of the
person providing the information to market a product
based on this new chemical entity, on the basis of the
approval granted to the party submitting such information.
24
141Roche Products, Inc. V. Bolar Pharmaceutical
Co., 733 F.2d 858 (FeD. Cir. 1984)
142The Drug Price Competition and Patent Term
Restoration Act of 1984, among others incorporat-
ed Title 35 U.S.C. § 271(e)(1), which exempts
from infringement the making, selling, or using of
a patented invention solely for purposes of sub-
mitting information to the FDA
143In the same sense, the Federal Circuit con-
firmed this in Telectronics Pacing Systems, Inc. v.
Ventritex, Inc., 982 F.2d 1520, 1525 (Fed. Cir.1992)
144In Chile, the Bolar exception has not been up to
now a major demand of the domestic pharmaceu-
tical industry
145 Abbott, 2004, commenting on a parallel in
CAFTA, points out that this latter agreement pro-
vides, “that marketing approval may only be
effective ‘once the patent expires’. Under the
TRIPS Agreement ‘patent expiration’ is not the
sole mechanism for authorized use of an invention
without the consent of the patent holder, including
authorizations granted under compulsory license.
Subparagraph 5 would not appear to contemplate
approval of a medicine for export under the
Decision on Implementation of Paragraph 6. In
addition, findings of non-infringement or invalidityof a patent should permit exercise of marketing
rights following regulatory approval. Such rights
are recognized under the U.S. regulatory review
‘Bolar’ exception. Also, the subparagraph 5 inter-
pretation of Article 30 of the TRIPS Agreement
must be read in contemplation of the limitations
set forth in Article 15.10.”
146 Article 1711.5, NAFTA
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A Party shall maintain this prohibition for a period of at
least five years from the date of approval for a pharma-
ceutical product and ten years from the date of approval
for an agricultural chemical product. Each Party shall pro-
tect such information against disclosure except where
necessary to protect the public.”
In some countries, it has been a practice that information
concerning safety and efficacy of products subject to mar-keting approval or sanitary permit is normally submitted by
the first undertaking that applied for such an authorization or
permit. Subsequent applicants regarding the same or similar
products will benefit from the information submitted by the
first applicant and the competent authorities will base their
decision for granting the marketing approval or the sanitary
permit on the undisclosed information provided by that first
applicant.
The purpose of the FTA provision is precisely to avoid such
a practice and to oblige any person who applies for market-
ing approval or sanitary permit to submit to the competent
authority, its own confidential information related to the
safety and efficacy regarding the pharmaceutical and agro-
chemical products which utilize a new chemical entity for
which marketing approval or sanitary permit is requested.
This important provision in the FTA suggests:
• The provision aims at implementing the TRIPS
Agreement (Article 39.3) in a particular way and does in
practice expand its coverage. The latter agreement oblig-
es WTO Members, as a condition to approve marketing
of pharmaceutical and agro-chemical products which
utilize a new chemical entity, to protect against unfair
commercial use, undisclosed test or other data the origi-
nation of which involves a considerable effort. The use by the competent authorities of the data provided for by
the first applicant of the marketing approval of a specif-
ic product could not be considered as “unfair commer-
cial use”.
• It refers to “undisclosed information”, which seems toinclude a drafting closer to NAFTA147. This was per-ceived as an important accomplishment in the negotia-tions because the original US proposals referred in gen-eral to “information”, whether undisclosed or not148. Inaddition, as the FTA does not provide for a definition of “undisclosed information” the one in TRIPS (Article39.2) should apply. This in itself is an important limita-
tion on the scope of this provision. However, the conceptof “undisclosed information” in the FTA seems to be broader than “undisclosed data” (as e.g. in CAFTA) or
25
147 Article 1711.5, NAFTA.
148See Article 16.8.1, US–Singapore FTA and
Article 15.10.1, US-Morocco FTA, which do notlimit the protection to “undisclosed” information
Box 8: Regulated products in recent US
trade agreements
The free trade agreement with Jordan (Article 4.22.) requires
the protection of undisclosed test or other data submitted to
obtain marketing approval for agricultural chemical and pharma-
ceutical products that utilize new chemical entities, the origina-
tion of which “involves a considerable effort.” There is no refer-
ence to prohibiting the use of such information for a market
approval application in favour of a third party.
The Singapore agreement (Article 16.8.1) goes a step further by
recognizing that
“[I]f a Party requires the submission of information concern-
ing the safety and efficacy of a pharmaceutical or agricultural
chemical product prior to permitting the marketing of such
product, the Party shall not permit third parties not having the
consent of the party providing the information to market the
same or a similar product on the basis of the approval grant-
ed to the party submitting such information for a period of at
least five years from the date of approval for a pharmaceuti-
cal product and ten years from the date of approval for an
agricultural chemical product.” Note that the protection is not
limited to products with new chemical entities.
The US agreement with Australia contains a set of complex pro-visions which differentiate between pharmaceutical and agricul-
tural chemical products. The agreement provides that
“[i]f a Party requires, as a condition of approving the market-
ing of a new pharmaceutical product, the submission of undis-
closed test or other data concerning safety or efficacy of the
product, the Party shall not permit third persons, without the
consent of the person who provided such information, to mar-
ket a same or similar product on the basis of (1) such infor-
mation or (2) the approval granted to the person who submit-
ted such information for at least five years from the date of
marketing approval in the Party.” (Article 17.10.1(a))
For agricultural chemical products the agreement states that
“[i]f a Party requires, as a condition of approving the market-
ing of a new agricultural chemical product, including certain
new uses of the same product, the submission of undisclosedtest or other data concerning safety or efficacy of that prod-
uct, the Party shall not permit third persons, without the con-
sent of the person who provided such information, to market
a same or similar product on the basis of (1) such information
or (2) the approval granted to the person who submitted such
information for ten years from the date of the marketing
approval of the new agricultural chemical product in the
Party.” (Article 10.10.1(b).
The US agreement with Australia defines a new product as
“…one that does not contain a chemical entity that has been
previously approved in the Party” (Article 17.10.1(d)). The
agreement also contains provisions on the protection of “new
clinical information (other than related to bioequivalency)” and
“evidence of prior approval of the product in another territory
which is essential to the approval of the pharmaceutical prod-uct.” (Article 17.10.2).
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“undisclosed test or other data” (as for example in theUS agreements with Australia and Jordan), but not sowide as simple “information” (as in the case of Singapore).
• The FTA standard applies only in case where the phar-maceutical or agro-chemical product utilizes a newchemical entity. When it utilizes a known chemical enti-ty it does not apply. Again, this could be seen as a suc-cess for Chile because, reportedly, earlier US proposalsdealt with any pharmaceutical and agro-chemical prod-uct whether or not it utilized a new chemical entity149.The definition of the meaning of a “new chemical prod-uct” is left to each Party.
• The prohibition for using this undisclosed informationto base marketing approval to third parties should bemaintained for a period of at least five years from thedate of approval of a pharmaceutical product and tenyears from the date of approval of an agricultural chem-ical product. This protection period has been a long-standing US position on this matter with regard to theimplementation of Article 39.3, TRIPS, and was advo-cated without success during the Uruguay Round.
• Should the period of five or ten years for the protectionof the undisclosed information still be applied in casewhere the information has become public or it has lostit commercial value or it has not been subject to rea-sonable steps to keep it in secret? 150 It is difficult toargue that even in those cases where the information has become public, the Parties shall continue to be obligednot to use that information as grounds for marketingapproval. According to the drafting of the FTA the timeframes apply to “undisclosed information” and do notextend to “disclosed information”.
• Each Party shall protect such undisclosed informationagainst disclosure “except where necessary to protectthe public”. No further explanation on the scope of this provision has been added, so it should correspond to thedomestic legislation to determine those situations. Thesame expressions are used in Article 39.3, TRIPS.
2. Further obligations about undisclosed information
The second part of the relevant FTA provision151 containsthree additional important obligations to the Parties about pharmaceutical products, which are subject to a patent:
• An extension of the patent term shall be available tocompensate the patent owner for unreasonable curtail-ment of the patent term as a result of the marketingapproval process. There is no definition in the FTA of
what “unreasonable curtailment of the patent” means,
as is the case with the provision on the adjustment of term of a patent (Article 17.9.6.), examined earlier. In
this situation such a definition should be provided by
the respective domestic legislation. The FTA does notset limits for the compensatory extension. It should be
understood that it is up to the domestic legislation of
each Party – as is the case in US law – to establish a rea-
sonable period of time for such compensatory exten-sion.
• The identity of any third party requesting marketing
approval of a patented pharmaceutical product shall be
available to the patent owner, during the term of the
patent. No formality for such availability is contemplat-
ed in the FTA, which means that it is up to the domes-
tic legislation to establish the appropriate procedure.
This is just a mechanism for publicity and transparency
so that patent owners are informed of such requests to
allow, if necessary, the timely exercise of their rights.
• A Party shall not grant “marketing approval” to any
third party prior to the expiration of the patent term,unless by “consent or acquiescence” of the patent
owner. In fact, this means an extension of the protection
afforded to the patent owner, which goes beyond the
TRIPS Agreement. This “linkage” between market
approvals and the consent or acquiescence of the pat-
entee creates a number of ambiguities and might bring
into question, among others, the ability to actually exer-
cise the flexibilities in TRIPS, such as the granting of
compulsory licences152. The bilateral trade agreements
signed by the USA with Australia, CAFTA, Jordan and
Singapore do not differentiate between “marketing
approval” and “sanitary permit” as in the case of the
FTA153.
In CAFTA, this “linkage” is made more explicit and even
includes references to market approvals “in another coun-
try” – an extension not provided for in the FTA.
Commenting on CAFTA, Abbott concludes that
“Yet perhaps the most problematic provision from a
TRIPS flexibility standpoint is Article 15:10(3)(a) which
provides that a third party (generic) producer, relying on
‘evidence or information concerning the safety and effica-
cy of a product that was previously approved, such as evi-
dence of prior marketing approval in the Party or in anoth-
er territory’, must be prevented from obtaining marketing
approval such as will allow that third party to market the
26
149 Again, Singapore did not limit the protection toproducts with new chemical entities
150 Article 39.2,TRIPS
151 Article 17.10.2, FTA
152Correa, 2004
153In fact, there are two provisions in the FTA deal-
ing with regulated products. The first provision
(Article 17.10.1), states that the protection isawarded to undisclosed information for the grant
of marketing approvals or sanitary permits. The
second provision (Article 17.10.2), establishes the
relation between regulated products and patents
referring exclusively to “marketing approvals”. A
logical interpretation should lead to the conclusion
that the parties probably meant different things in
the use of the terms “marketing approval” and
“sanitary permits”. One expression of this mightbe the interpretation that if a Party grants only
sanitary permits (i.e. to certify the safety and effi-
cacy of the product), the provisions of Article
17.10.2 (that refers to marketing approval) would
not apply to that Party. However, as stated in this
study, the provisions of the FTA in this area derive
from Article 39, TRIPS, and these refer only to
marketing approvals.
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product ‘during the term of that patent, unless by consent
or acquiescence of the patent owner’”154.
3.3 Copyright 155 and related rights
The FTA may be the first trade agreement signed by the USA
where copyright and related rights are given a separate treat-
ment156. This might be explained by the fact that countries
that are party to the Rome Convention are requested to treatcopyright and related rights separately, to preserve the dif-
ferences between authors and related right holders. The trade
agreement with Singapore that was negotiated simultaneous-
ly with the FTA treats them jointly, as is the case of the most
recent agreement with Morocco. This approach appears to be
favoured by US industry as illustrated by the following com-
ments made about CAFTA:
“Industry was pleased that the Chile formulation was not
repeated and it is hopeful that it will not be perpetuated in
any future FTA. In the view of the industry record pro-
ducers and performers should not be relegated to second-class citizenship under “related” or “neighbouring” rights
regimes. In their view, the FTA with Chile perpetuates this
dichotomy.”157
While both the USA and Chile have ratified the traditional
conventions on copyright, including the recent WIPO
Copyright Treaty (WCT) and the WIPO Performances and
Phonograms Treaty (WPPT) of 1996, only Chile is party to
the 1961 Rome Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organizations.
This different treatment in the FTA of copyright and related
rights158 reflects also, to a certain extent, the different
approaches towards copyright, followed by the USA, and the
continental European approach to “rights of authors,” fol-
lowed by Chile159. As discussed in this section, although the
FTA narrows the separation between copyright and related
rights, many differences between both systems do persist.
Unlike TRIPS and the Rome Convention, the FTA does not
deal with rights of Broadcasting Organizations; it refers only
to rights of performers and producers of phonograms. The
FTA does not deal with moral rights either.
3.3.1 Copyright
1. Scope of protection
On protectable subject matter, the FTA does not innovate
with respect to the Berne Convention or the TRIPS
Agreement. Thus, the FTA applies to literary and artistic
works, as understood by the Berne Convention160, including
computer programs and compilations of data in accordance
with TRIPS161
and the WCT162
. It does not provide for pro-tection of non-original databases as in the EU163 or as has
been proposed in the draft text of the FTAA164.
2. Reproduction right
On rights conferred, the FTA provides authors with
Article 17.5.1: “ ...the right to authorize or prohibit all repro-
ductions of their works, in any manner or form, permanent or
temporary (including temporary storage in electronic form).”
This reproduction right builds upon the Berne Convention165
which establishes a right of reproduction of the author’s
work “in any manner or form”, and on the Agreed Statement
concerning Article 1(4) of the WCT, which provides that the
right of reproduction set in Berne “fully appl(ies) in the dig-
ital environment, in particular to the use of works in digital
form”. Though the Agreed Statement166 adds that the storage
of a protected work in digital form in an electronic medium
constitutes a reproduction, it says nothing about temporary
copies, such as those made in the RAM memory of a com-
puter, an issue that was extensively discussed during the
negotiations of the WCT, but did not make it into the final
text. Here the FTA goes beyond Berne and the WCT in that
it makes clear that temporary copies in electronic form are
subject to the right of reproduction. But, the FTA, in a foot-
note to the main text, allows for the application of specific
exceptions and limitations in the digital environment:
Footnote to Article 17.7.3: “For works, other than com-
puter software, and other subject matter, such exceptions
and limitations may include temporary acts of reproduc-
tion which are transient or incidental and an integral and
essential part of a technological process and whose sole
purpose is to enable (a) a lawful transmission in a network
between third parties by an intermediary; or (b) a lawful
use of a work or other subject-matter to be made; and
which have no independent economic significance.”
27
154 Abbott, 2004
155In this paper the term copyright, includes, with-
out distinction, copyright and rights of authors
156NAFTA treats them separately but limits related
rights to producers of phonograms. Though both
Canada and Mexico are part of the Rome
Convention, Canada became a part of it only in
1998
157IFAC-3-CAFTA, 2004
158There is a third section in the FTAunder the
sub-heading of “Obligations Common to Copyright
and Related Rights”
159The separation of Copyright from Related Rights
in the same Chapter is not casual. In discussing
the treatment given to Copyright and RelatedRights in the TRIPS Agreement, Bercovitz, 2000,
points out that conceptually and systematically, a
very important effect was achieved towards equal-
ization of Copyright and Related Rights by dealing
with both of them in the same Section (TRIPS
Part II, Section 1)
160 Article 2, Berne
161 Article 10, TRIPS
162 Articles 4 and 5, respectively, WCT
163 A bill that would provide protection for non-origi-
nal databases has recently been introduced in the
US Congress. HR 3261, “Database and
Collections of Information Misappropriation Act(DCIMA)
164 A proposal in Article 5.3(m) of the FTAA draft
text would incorporate by reference a “Treaty for
the Protection of Non-Copyrightable Elements of
Databases.” Such a treaty does not yet exist, but
a WIPO Conference prepared a draft for further
consideration in 1996.
165 Article 9.1, Berne
166The Agreed Statement concerning Article 1(4) of
the WCT is the only non-unanimous Statement
under both the WCT and the WPPT
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Because of the fundamental importance of temporary copies
in the digital environment, the explicit possibility of exempt-
ing temporary copies from the right of reproduction, subject
to the traditional “three-step test”167, may be important at the
moment of devising appropriate IPRs policies. The rapid
evolution of emerging technologies in this field explains the
need for the creation of exceptions for temporary copies. For
instance, the USA has dealt with this issue by creating limit-
ed exceptions, such as allowing the making of copies for
machine maintenance or repair of a computer, or by exempt-
ing small copies incidental to web casting called buffer
copies. Therefore, other temporary copies, besides those
explicitly exempted, must follow the fair use test of Section
107 of the US Copyright Act. The EU, on the other hand, has
included a blanket exception in its Directive168 with a similar
wording to the quoted footnote in the FTA.
The said footnote provides that the exception will not apply
to computer programs, which does not mean that Parties can-
not establish exceptions for those kinds of works. It simply
means that, if any, exemptions for computer programs will
be subject to the three-step test accepted by the FTA169.
US industry has pointed out that the language in the footnote
would be inconsistent with US law and jurisprudence and
would create a dangerous precedent for the industry. They
adduce that it introduces concepts strange to US law, such as
“transient” and “incidental”, and would subject the right of
reproduction to an “economic” and “duration” test170.
However, the footnote does not create an obligation to adopt
the temporary copy exception, so the USA may or may not
choose to implement it. It just states that the Parties are free
to incorporate this exception into their domestic law.
Finally, neither the US trade agreement with CAFTA, nor
those with Australia, Singapore, Morocco or Jordan have a
provision similar to the FTA on a temporary copy exception
to the right of reproduction.
3. Right of communication to the public
The FTA deals with the right of communication to the pub-
lic171, in the same terms as the WCT172. Therefore this right of
communication to the public covers all kinds of works173
communicated to the public by wire or wireless means, with-
out prejudice to the Berne provisions that deal with this right.
This broad right of communication is not fully covered by
TRIPS.
However, the FTA provides that authors have the right to
authorize or prohibit the communication to the public
including
Article 17.5.2: “the making available to the public of their
works in such a way that members of the public may
access these works from a place and at a time individual-
ly chosen by them.”
This means that the Parties will provide for an exclusive
right for interactive, on-demand, communications. This pro-
vision leaves out private communications such as sending an
e-mail with copyrighted content.
4. Right of distribution
On the right of distribution, the FTA174 practically transcribes
the WCT provision on the exclusive right of making avail-
able to the public the original and copies of the works
through sale or other transfer of ownership175, but omits the
exhaustion of rights provision of the latter. The relevant
WCT provision on exhaustion states:
“Nothing in this Treaty shall affect the freedom of
Contracting Parties to determine the conditions, if any,
under which the exhaustion of the right in paragraph (1)
applies after the first sale or other transfer of ownership of
the original or a copy of the work with the authorization
of the author.”176
Note, however, that Parties are free to determine whether
they will apply a national or international regime of exhaus-
tion of rights. This conclusion is based, among others, on the
application of the non-derogation principle, discussed above.
While Chile in its FTA implementing legislation177, together
with establishing the right of distribution, provided for a sys-
tem of international exhaustion of rights, the USA has tradi-
tionally applied a national exhaustion regime178.
While CAFTA does not deal with the issue of exhaustion of
rights, the US agreement with Australia transcribed the rele-
28
167The so-called three-step test allows Parties to“confine limitations or exceptions to exclusive
rights to certain special cases which do not con-
flict with a normal exploitation of the work and do
not unreasonably prejudice the legitimate interests
of the right holder”. See Article 13, TRIPS
168See Article 5 of Directive 2001/29/EC of the
European Parliament and of the Council of 22
May 2001 on the harmonization of certain aspects
of copyright and related rights in the informationsociety
169 Article 17.7.3, FTA: “Each Party shall confine
limitations or exceptions to rights to certain special
cases which do not conflict with a normal
exploitation of the work, performance, or phono-
gram, and do not unreasonably prejudice the
legitimate interests of the right holder”
170IFAC-3-Chile, p 9
171 Article 17.5.2, FTA: “Without prejudice to theprovisions of Articles 11(1)(ii), 11bis(1)(i) and (ii),
11ter(1)(ii), 14(1)(ii), and 14bis(1) of the Berne
Convention for the Protection of Literary and
Artistic Works (1971) (Berne Convention), each
Party shall provide to authors of literary and artis-
tic works the right to authorize or prohibit the com-
munication to the public of their works, by wire or
wireless means, including the making available to
the public of their works in such a way that mem-
bers of the public may access these works from aplace and at a time individually chosen by them.”
172See Article 8 and the Agreed statement, WCT
173The Berne Convention did not provide for a
broad right of communication to the public that
encompassed all works. On the contrary, it provid-
ed for this right for only certain works and for cer-
tain kinds of communications, thus leaving out
other kind of works (e.g. photographic works)
174See Article 17.3, FTA: “Each Party shall provideto authors of literary and artistic works the right to
authorize the making available to the public of the
original and copies of their works through sale or
other transfer of ownership.”
175 Article 6.1, WCT
176 Article 6.2, WCT
177See Law 19.914, Articles 3.6, 3.10, 3.12 pub-lished November 19th, 2003
178The US has traditionally barred parallel imports
by applying the territoriality principle of copyright
(Ninth Circuit Court of Appeals in BMG v. Perez),
but in a more recent case the US Supreme Court
allowed for parallel imports if the products had
been manufactured in the US (Quality King
Distributors, Inc. v. L'Anza Research International,
Inc.). Title 17 U.S.C. § 109 in relation to Title 17U.S.C. § 602
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vant provision of the WCT in a footnote to the provision on
the right of making available to the public. The FTAA draft
Chapter, in its turn, has a couple of provisions which would
limit the flexibilities that the TRIPS Agreement, the WCT
and the WPPT allow for. The FTAA proposal simply pro-
hibits parallel imports by affording authors, performers and
producers of phonograms a right of importation. A very sim-
ilar provision made its way into the agreement with Jordan.
A right of importation is also incorporated in NAFTA and the
trade agreement between the USA and Vietnam. This is in
line with the view advanced by the US industry as has been
illustrated by the recent report on CAFTA179 and the Industry
Functional Advisory Committee (IFAC)-Chile report180.
In the FTAA an alternative proposal adopts a middle ground
approach between national and international exhaustion. It
suggests a system of regional exhaustion of rights, after a
transition period of five years.
Finally, the distribution right (Article 17.5.3) applies only to
fixed copies that can be put into circulation as tangible
objects181
. It does not provide for the distribution of electron-ic copies. Some have argued that limitations to the right of
distribution, such as the doctrine of exhaustion or the first
sale doctrine, do not apply to the digital transmission of law-
ful electronic copies, because the sender would always retain
a copy of the work 182. One may ask whether the Parties still
have leeway to apply limitations to the distribution right for
electronic copies, when together with sending an electronic
copy, the sender deletes or destroys the original copy in the
computer. This could be considered a transfer of ownership
altogether, the same as selling a book in the analogue world.
It seems that because this particular provision and its foot-
note are limited to the distribution right (limited to tangible
objects), Parties could provide for a digital first sale183.
5. Term of protection
Consistent with the Berne Convention (“countries of the
Union may grant a term of protection in excess of those pro-
vided” in the Treaty)184, the FTA extends copyright by 20
years for most works, to life of the author plus 70 years – up
from the life of the author plus 50 years after death term of
protection set in TRIPS185 .
In those cases where the term of protection of a work is cal-
culated on a basis other than the life of a natural person, such
as works whose author is a legal entity, the term was set at a
minimum of 70 years from the end of the calendar year of thefirst authorized publication of the work, or failing such
authorized publication within 50 years from the creation of
the work, at a minimum of 70 years from the end of the cal-
endar year of the creation of the work. In the FTA then, the
USA accepted lesser times of protection than those prevail-
ing in its domestic law. In fact, in the USA when the work is
to be calculated on a basis other than the life of a natural per-
son, the term shall be not less than 95 years from the end of
the calendar year of the first authorized publication of the
work, or failing such authorized publication within 25 years
from the creation of the work, not less than 120 years from
the end of the calendar year of the creation of the work, per-formance or phonogram. In general, industry welcomed the
approach taken in the FTA and subsequently by CAFTA186.
For photographic works, the general rule for most countries
is still the 25-year protection from the making of the work,
provided for in the Berne Convention187. Parties to the WCT
agreed to modify the Berne/TRIPS standard by stating that
they would “not apply the provisions of Article 7(4) of the
Berne Convention”188. Therefore, the term of protection of
photographic works went from 25 years from the making of
the work, to life of the author plus 50 years, which is the gen-
eral rule in Berne. The FTA again extends this term of pro-
tection beyond that in the WCT, by 20 years. Hence, photo-graphic works are protected by the general 70-year rule, as
explained above. While the USA already protected this type
of work by the standard in the FTA, Chile protected them
only for the life of the author plus 50 years.
29
179 “Unfortunately, the text does not contain a pro-
vision…providing for the right of a copyright owner
to prevent parallel imports of its products manu-
factures outside a CAFTA member country that
are not intended for distribution in that country.
The failure to obtain such important protection is a
deficiency in the copyright text.” IFAC-3-CAFTA, atp 11
180 “Unfortunately, the text does not contain a pro-
vision which follows U.S. law (17 USC §602) pro-
viding for the right of a copyright owner to prevent
parallel imports of its products manufactured out-
side Chile that are not intended for distribution in
that country. The failure to obtain such important
protection is a deficiency in the copyright text.”
IFAC-3-Chile, at p 12
181Footnote 10, Article 17.5.3, FTA: “The expres-
sions “copies” and “original and copies”, being
subject to the right of distribution under this para-
graph, refer exclusively to fixed copies that can be
put into circulation as tangible objects, i.e., for this
purpose, “copies” means physical copies”
182In addition to the copies in the recipient and
sender’s computers, transient copies are made in
the computer networks between the sender and
the recipient’s computers. Therefore, the repro-duction right would also be involved and excep-
tions to this right should be in place if allowing for
a digital first sale doctrine
183This issue has been extensively discussed in
the US, where the Government declined to
endorse a “digital first sale doctrine” to modify
U.S.C. Title 17 § 109, among others, “unless a
forward-and delete technology is employed to
automatically delete the sender's copy”. Another strong argument against carving out an exemption
was that the transmission of works interferes with
the exclusive right of reproduction. See the US
Copyright Office’s Executive Summary of the
Digital Millennium Copyright Ac Section 104
Report, at http://www.copyright.gov/reports/stud-
ies/dmca/dmca_executive.html
184 Article 7.6, Berne Convention.
185 Articles 9.1 and 12, TRIPS
186“In a major advance, and continuing the prece-
dents established in the Singapore and ChileFTAs, CAFTA countries have agreed to extend
their terms of protection closer to that in the U.S.
– to life of the author plus 70 years for most
works. While industry sought to have the term of
protection for sound recordings and audiovisual
works extended from 50 years from publication to
a term matching the U.S. law’s 95 years, a com-
promise was struck at 70 years. We urge thatfuture agreements move that level to the full 95
years (Article 15.5.4).” IFAC-3-CAFTA Report,
2004, p11
187 Article 7.4, Berne Convention
188 Article 9, WCT
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It is striking that the US position for an extension of the term
of copyright protection was being advocated at the same time
as the US Supreme Court was reviewing the 1998 Copyright
Term Extension Act (CTEA). The dispute involved big enter-
tainment companies on the one hand and a coalition of
Internet publishers on the other supported by academia189.
The US Supreme Court finally upheld the US law against
allegations of unconstitutionality. Internet publishers seeking
to publish, inter alia, early Mickey Mouse cartoons, jazz
classics and novels of F. Scott Fitzgerald had argued that the
extension of all copyright terms by 20 years violated the con-
stitutional clause according to which copyright may be
issued “for limited times” only. The principal argument of
the opponents of copyright term extension was that the
extension had the effect of delaying entry into the public
domain of works created under a previous (shorter-term)
regime. Since the authors of existing copyrighted works
were not being given any new incentive to create, the exten-
sion had the primary effect of limiting works in the public
domain, and this was contrary to the objectives of the copy-
right clause of the Constitution190
.Several countries in Latin America have increased the terms
of protection of copyrighted works at levels similar to the
ones agreed in the FTA. For example, Mexico affords life of
the author plus 75; and Brazil, Ecuador, and Peru, life of the
author plus 70. These extended terms of protection, at least
in the case of countries like Brazil and Mexico, may find an
explanation in the huge cultural industries prevalent in those
countries. Smaller economies should evaluate the costs of
increasing by 20 years the minimum term of protection stat-
ed in TRIPS, as thousands of works, performances and
phonograms would be prevented from falling into the public
domain.
3.3.2 Related rights
1. Scope of related rights
As reviewed above, related rights are treated separately from
copyright. This does not mean that there are no similarities
between them. Indeed, for the right of reproduction and the
right of distribution (making available to the public) they are
treated just the same for authors, performers191 and producers
of phonograms. As for the rights of reproduction and distri-
bution for performers and producers the wording is drawn
from the WPPT192.
On the right of communication to the public193 of related
rights, the standard in the FTA is the same as for copyright,
as discussed above. Together with establishing the right of
communication of fixed performances194 or phonograms195,including the interactive on-demand communications, the
FTA preserves some exceptions and limitations allowed for
under previous treaties. Parties are allowed to provide for
exemptions for
Article 17.6.5 (b): “…broadcasting or communication to
the public of performances or phonograms through ana-
logue communication and free over-the-air broadcasting,
and the exceptions or limitations to this right for such
activities, shall be a matter of domestic law. Each Party
may adopt exceptions and limitations, including compul-
sory licenses, to the right to authorize or prohibit the
broadcasting or communication to the public of perform-ances or phonograms in respect of other non-interactive
transmissions in accordance with Article 17.7(3). Such
compulsory licenses shall not prejudice the right of the
performer or producer of a phonogram to obtain equitable
remuneration.”
In Chile, the law gives performers and producers of phono-
grams196 a right of equitable remuneration for the broadcast-
ing197 of their performances and phonograms, while the USA
does not grant equivalent rights.
The FTA underlines that the enjoyment and exercise of the
rights of performers and producers of phonograms are not
subject to any formality. This is similar to the WPPT198 thatcorresponds, on its part, to a parallel provision of the Berne
Convention199, also incorporated in the TRIPS Agreement200.
2. Term of protection
In a similar provision to the one in the copyright section, per-
formers and producers of phonograms are granted a mini-
mum of 70 years from the end of the calendar year of the first
30
189Stanford professor Lawrence Lessig led the
case. See Lessig, 2004
190See Eldred et al. v. Ashcroft 537 U.S. 2003 and
comments in the UNCTAD-ICTSD,Resource
Book , Part Two, chapter 2.1. For full information
on the case and efforts to overturn the CTEA,seehttp://eldred.cc/
191The FTAcontains a number of definitions in
Article 17.6.8. They are the same as the ones in
Article 2 of the WPPT, which in its turn, are very
similar to the definitions in the Rome Convention,
with certain modifications necessary to make
them operative in the digital age. Accordingly,
“performers means actors, singers, musicians,dancers, and other persons who act, sing, deliver,
declaim, play in, interpret, or otherwise perform lit-
erary or artistic works or expressions of folklore.”
192 Articles 7, 8 11 and 12, WPPT
193Communication to the public of a performance
or a phonogram means the transmission to the
public by any medium, otherwise than by broad-
casting, of sounds of a performance or the
sounds or the representations of sounds fixed in a
phonogram. For the purposes of Article 17.6 (5),
FTA, “communication to the public” includes mak-
ing the sounds or representations of sounds fixedin a phonogram audible to the public
194Fixation means the embodiment of sounds, or of
the representations thereof, from which they can
be perceived, reproduced, or communicated
through a device, Article 17.6.8 (c), FTA
195Phonogram means the fixation of the sounds of
a performance or of other sounds, or of a repre-sentation of sounds, other than in the form of a
fixation incorporated in a cinematographic or other
audiovisual work, Article 17.6.8(b), FTA
196Producer of a phonogram means the person, or
the legal entity, who or which takes the initiative
and has the responsibility for the first fixation of
the sounds of a performance or other sounds, or
the representations of sounds, Article 17.6.8(d),
FTA
197Broadcasting means the transmission by wire-
less means for public reception of sounds or of images and sounds or of the representations
thereof; such transmission by satellite is also
broadcasting; transmission of encrypted signals is
broadcasting where the means for decrypting are
provided to the public by the broadcasting organi-
zation or with its consent, Article 17.6.8(f), FTA
198 Article 20, WPPT
199 Article 5.2, Berne
200 Article 62.1, TRIPS, allows Members to require
formalities as condition of acquisition or mainte-
nance of all IPRs in the Agreement, save for copy-
right, and related rights covered in the Agreement
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authorized publication of the performance or phonogram, or
failing such authorized publication, within 50 years from the
fixation of the performance or phonogram, a minimum of 70
years from the end of the calendar year of the fixation of the
performance or phonogram. This provision applies when the
terms are to be calculated on a basis other than the life of a
natural person. This would normally be the case of collective
works, works made for hire in the USA and computer and
cinematographic works in Chile.
In brief, this increase in the term of protection means that, in
less than 10 years, the term of protection of related rights has
gone up from 20 years after the fixation, the performance, or
the broadcast, recognized by the Rome Convention, to 50
years from fixation or performance under TRIPS, to 70 years
in the FTA. Though the USA already provided for even
longer terms of protection201, Chile’s Copyright Law granted
only 50 years to performers and producers of phonograms202.
Chile, in its December 2003 FTA implementation law,
already amended the terms of protection, as the latter did not
provide for transition periods on this matter.
3.3.3 Obligations common to copyright
and related rights
Although not as explicitly as in the US agreements with
CAFTA and Australia, the FTA narrows the asymmetries
between copyright and related rights. As pointed out earlier,
Chile follows a continental European tradition where
authors, as the original creators of the works, are afforded
stronger protection than that granted to performers and pro-
ducers of phonograms. This dichotomy was not well appre-
ciated by US industry, which in a comparison with the out-
come of CAFTA stated:
“The CAFTA text includes a provision (Article 15.5.3)
that makes clear that there is no hierarchy of rights
between those of authors and those of record producers.
This is a welcome clarification of dangerous provisions in
some Latin American copyright laws (such as in Chile)
and sets a good precedent with other Latin countries and
in the FTAA.”203
1. Authorizations
The relevant provision on authorizations provides that:
Article 17.7.1: “Each Party shall establish that in cases
where authorization is needed from both the author of a
work embodied in a phonogram and a performer or pro-
ducer owning rights in the phonogram, the need for the
authorization of the author does not cease to exist because
the authorization of the performer and producer is also
required. Likewise, each Party shall establish that in cases
where authorization is needed from both the author of a
work embodied in a phonogram and a performer or pro-
ducer owning rights in the phonogram, the need for the
authorization of the performer or producer does not cease
to exist because the authorization of the author is also
required204.
Prior to the implementation of the FTA, in December 2003,
Chile’s Copyright Law still provided that when the interest
of an author in a phonogram conflicted with the interest of
the producer of the phonogram, regarding the public per-
formance of the phonogram, the author would always pre-
vail over the producer. After the implementation law was
enacted, this provision was amended in order to erase such
hierarchy205.
2. Economic rights
The FTA, in what again seems to be a bridge between copy-
right and related rights, provides for freedom of contract
with respect to economic or patrimonial rights, as opposed to
moral rights206. It also states that the licensee and the employ-
er in the case of works made for hire will be able to fully
exercise the same rights as the original creator of the work
(licensor or employee). The relevant provision states that
Article 17.7.2: “…any person owning any economic right,
i.e., not a moral right, may freely and separately transfer
such right by contract; and any person who has acquired
or owns any such economic right by virtue of a contract,
including contracts of employment underlying the cre-
ation of works and phonograms, shall be permitted to
exercise that right in its own name and enjoy fully the
benefits derived from that right.”
However, despite the apparent freedom of contract and the
general rule that the employer will be able to fully exercise
rights, the FTA adds that each Party may establish:
“(i) which contracts of employment underlying the cre-
ation of works or phonograms shall, in the absence of a
written agreement, result in a transfer of economic rights
by operation of law; and
(ii) reasonable limits to the provisions … to protect the
interests of the original right holders, taking into account
31
201The US has an intricate system of counting
duration of copyright, depending on whether the
works were made before or after the dates of cer-
tain amendments to the Copyright Act. For works
whose author is a legal entity, for works made for
hire, for anonymous and for pseudonymousworks, the duration is the shorter of 95 years from
publication, or 120 years from creation
202In 1993, the EU also increased the terms of pro-
tection of related rights to 50 years. See Council
Directive 93/98/EEC of 29 October 1993 harmo-
nizing the term of protection of copyright and cer-
tain related rights
203IFAC-3-CAFTA, 2004, p 11
204This provision mirrors the Agreed Statement to
Article 1, WPPT
205 Article 65 Para. 2 of Chile’s Copyright Law (Ley
No.17.336) also reflects this hierarchy: “Nothing in
the provisions of this law with respect to related
rights may be interpreted in detriment of the pro-
tection that it provides to authors.”
206Chile provides for strong protection of moral
rights through its Copyright Law (Ley 17.336 arts.14-16), while the USAhas limited federal protec-
tion only for works of visual arts (Title 17 U.S.C.
§§ 101, 106 A) and through state laws (most
States follow either the California or the New York
statutes)
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the legitimate interests of the transferees”207.
The importance of this provision lies in that it reflects the
tensions between the common law system of the USA and
the continental European system followed by Chile:
• In the USA, under the doctrine of “works made for
hire”, the employer or the person for whom the work
was prepared is considered to be the author, except when
“the parties have expressly agreed otherwise in a writteninstrument signed by them”208. In Chile, contrary to the
USA, the general rule is that authorship always rests
with the original creator of the work, save for some very
limited exceptions in the case of computer programs,
cinematographic works, and works made by government
employees. The Parties in the FTApreserved their facul-
ty to determine in which contracts there will be an auto-
matic transfer of rights from the employee to the
employer.
• The Parties preserved a limited authority to reasonably
limit the freedom of contract. This may be explained
because in Chile, besides moral rights, some economicrights are inalienable, among others, the droit de suite
for painters, sculptors and draughtsman to receive at
least 5% of future sales of his/her works209.
• Neither NAFTA nor CAFTA have provisions that limit
the freedom of contract or the automatic transferring of
authorship that rests with the employer. Although the US
agreement with Australia does not have droit de suite210
it left that option open by appropriate reference to the
Berne Convention.
3. Limitations or exceptions
The FTA allows for limitations and exceptions to rights for
Article 17.7.3: “certain special cases which do not con-flict with a normal exploitation of the work, performance,
or phonogram, and do not unreasonably prejudice the
legitimate interests of the right holder”
in the same sense as the “three–step rule” provided respec-
tively, in TRIPS (Article 13), the Berne Convention (Article
9.2), the WCT (Article 10) and the WPPT (Article 16)211.
On exceptions and limitations in the digital environment, the
FTA reproduces the respective Agreed Statements to Articles
10 and 16 of the WCT and WPPT, but builds on them by
explicitly allowing for temporary copies which are transient
or incidental and an integral and essential part of a techno-
logical process and
“…whose sole purpose is to enable (a) a lawful transmis-
sion in a network between third parties by an intermedi-
ary; or (b) a lawful use of a work or other subject matter
to be made; and which have no independent economic sig-
nificance.”212
As mentioned above, the quoted footnote takes its language
from the EU Copyright Directive. The important effect of
this carved out exception from the exclusive rights is that,subject to these requirements, temporary copies do not have
to go through the sometimes very strict process of the “three-
step test”. This exception has been pointed out by the US
industry as setting “a dangerous exception to the all-impor-
tant reproduction right, an exception that could have serious
consequences for right holders doing business on the
Internet”213.
There are no restrictions in the FTA to use the flexibilities of
the “Special Provisions Regarding Developing Countries” in
the Annex of the Berne Convention, as was the case in the
treaty with Vietnam which provides that:
“Neither Party may grant translation or reproductionlicenses permitted under the Appendix to the Berne
Convention where legitimate needs in that Party’s territo-
ry for copies or translations of the work could be met by
the right holder’s voluntary actions but for obstacles cre-
ated by the Party’s measures.”
4. Acquisition and management of software for government use
The FTAconfirms that government use of computer software
should take place as duly authorized. To that end, the Parties
shall issue appropriate legal instruments to actively regulate
the acquisition and management of software for such gov-
ernment use. Such measures may take the form of proce-
dures for the preparation and maintenance of inventories of software present on agencies’ computers and inventories of
software licenses.
This obligation has elicited concerns about its exact meaning
and consequences. It could be understood as being an
encouragement to the exclusive use of proprietary software
as opposed to open source software214. Others believe that
fears are exaggerated because the use of open source soft-
ware also operates on the basis of “due authorization”.
5. Circumvention of effective technological measures
The FTA provides for very strict rules against the circum-
vention of technological protection measures (TPMs) used
by authors, performers and producers of phonograms or any
32
207 Article 17.4.2 (b), FTA
208See definition of “Work made for hire” under
U.S.C. Title 17 § 101 and “Ownership of copy-
rights” under U.S.C. Title 17 § 201
209Note that the California Civil Code, Section 986
also provides for droit de suite for artists living in
that state
210 Article 17.4.6(b), US-Australian FTA
211See discussion in UNCTAD-ICTSD, Resource
Book
212Footnote 17, FTA
213IFAC-3-Chile, 2003
214US industry considers this type of obligation “an
all-important requirement.” “The U.S. has already
issued such an Executive Order and it is critical
for all governments, CAFTA members included, to
ensure that their software use is fully licensed and
that effective software management systems areestablished.” IFAC-3-CAFTA, 2004
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protected material to protect their works, performances and
phonograms, protected by copyright and related rights.
The provisions on TPMs go beyond the WCT215 and the
WPPT216, which only state that Parties ”shall provide ade-
quate legal protection and legal remedies” against the cir-
cumvention of TPMs, leaving it to each Party to decide the
way in which it will implement the provisions and whether it
will apply civil and/or criminal sanctions to infringers.
The FTA provides for very detailed rules aimed at providing
adequate legal protection and effective legal remedies to
fight against circumvention of effective technological meas-
ures.217 In a key provision, Parties are committed to
Article 17.7.5: “provide that any person who knowingly
circumvents without authorization of the right holder or
law consistent with this Agreement any effective techno-
logical measure that controls access to a protected work,
performance, or phonogram shall be civilly liable and, in
appropriate circumstances, shall be criminally liable, or
said conduct shall be considered an aggravating circum-
stance of another offence. No Party is required to imposecivil or criminal liability for a person who circumvents
any effective technological measure that protects any of
the exclusive rights of copyright or related rights in a pro-
tected work, but does not control access to such work 218.
The terminology and the TPMs provisions draw from the
controversial US Digital Millennium Copyright Act
(DMCA)219, which was
“nominally intended to bring US law into compliance
with the 1996 WIPO Treaties on copyright and the
Internet, but in fact [it] went well beyond what those
treaties required.”220
The strong provisions make it a civil and criminal offence totamper with embedded antipiracy measures that control
access to works and phonograms. It also provides for civil
liability, and when done wilfully and for prohibited com-
mercial purposes, criminal liability for the manufacture,
import, distribution, sale or rental of devices, products or
components that serves the purpose of circumventing TPMs
that control access and the exclusive rights in a work or
phonogram221.
Critics of the TPMs provisions of the DMCA argue that theyimpede lawful uses of works, such as making a copy of amusic CD to listen to it in a notebook, making a backup copyof a computer program as allowed for by Chilean222 and US
law223
, or copying small parts of a movie in a DVD for pur- poses of teaching or criticism. TPMs have also been used to bar the manufacture of competing products, to suppressspeech, to limit the first sale doctrine and to fragment mar-kets through the use of regional zone codes in DVDs.Moreover, the use of TPMs restricts access to works thathave already fallen in the public domain224. The import of
33
215The WCT addresses the issue of TPMs in
Article 11 ("Obligations concerning Technological
Measures") by providing that: “Contracting Parties
shall provide adequate legal protection and effec-
tive legal remedies against the circumvention of
effective technological measures that are used by
authors in connection with the exercise of their rights under this Treaty or the Berne Convention
and that restrict acts, in respect of their works,
which are not authorized by the authors con-
cerned or permitted by law."
216 Article 18, WPPT
217“Effective technological measure means any
technology, device, or component that, in the nor-
mal course of its operation, controls access to a
work, performance, phonogram, or any other pro-
tected material, or that protects any copyright or
any rights related to copyright, and cannot, in the
usual case, be circumvented accidentally.” Article17.7.5 (f), FTA
218 Article 17.7.5, FTA provides further: “(b) each
Party shall also provide administrative or civil
measures, and, where the conduct is wilful and for
prohibited commercial purposes, criminal meas-
ures with regard to the manufacture, import, dis-
tribution, sale, or rental of devices, products, or
components or the provision of services which:(i) are promoted, advertised, or marketed for the
purpose of circumvention of any effective techno-
logical measure, or (ii) do not have a commercial-
ly significant purpose or use other than to circum-vent any effective technological measure, or (iii)
are primarily designed, produced, adapted, or per-
formed for the purpose of enabling or facilitating
the circumvention of any effective technological
measures. Each Party shall ensure that due
account is given, inter alia, to the scientific or edu-
cational purpose of the conduct of the defendant
in applying criminal measures under any provi-
sions implementing this subparagraph. A Party
may exempt from criminal liability, and if carried
out in good faith without knowledge that the con-
duct is prohibited, f rom civil liability, acts prohibit-
ed under this subparagraph that are carried out in
connection with a non-profit library, archive or
educational institution.”
219U.S.C. Title 17 § 1201
220Lemley et al, p 891
221“The DMCA was a bit of law intended to back up
the protection of [this] code designed to protect
copyrighted material. It was, we could say, legal
code intended to buttress software code which
itself was intended to support the legal code of
copyright ”. Lessig, 2004
222Law 17.336, Article 47
223U.S.C. Title 17 § 117
224Electronic Frontier Foundation
Box 9: The DMCA and developing
countries
“These controversial provisions of the DMCA have been heavily
criticized as overprotective and lacking in any limitations to pro-
tect legitimate uses of content protected by technological means.
For example, the DMCA does not admit strong fair use excep-tions or other limitations that arguably preserve the important
balance between public and private interest in digital content.
Important public welfare issues implicated by the DMCA model
include: the ability of competitors to create software products for
purposes of interoperability, encryption research and security
testing, and control over complementary markets. On the other
hand, the EU model of the WCT contains room for flexibility for
member states to consider enacting limitations and exceptions
that are consistent with those provided by national law.
Notwithstanding the significant criticism of the DMCA, a series of
bilateral trade agreements negotiated by the USA have included
DMCA like provisions, and thus made these inordinately high
standards a de facto model for global implementation of the
WCT. The combined effect of private law mechanisms such as
torts and contract law, and public law regulation through copy-
right and other specialized regimes like the DMCA, will leadinevitably to increased difficulty in access to content. In a situa-
tion where access to hardware is already an important hindrance
to developing countries, adding another layer of impediments,
and inevitably raising costs, is problematic for the interests of
developing countries in utilizing information technology.”
Source: Ruth Okedji, 2004
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these provisions in bilateral agreements has also been criti-
cized for adding new hurdles to developing countries access to
information technology (Box 9).
Very limited exemptions to the FTA detailed provisions –
aimed at providing adequate legal protection and effective
legal remedies to fight against circumvention of effective tech-
nological measures – are permitted for cases such as:
• reverse engineering to achieve interoperability between
computer programs;
• analyzing and identifying flaws of encryption technologies;
• preventing access of minors to inappropriate online con-
tent;
• correcting security of a computer;
• disabling a capability to collect and disseminate personal
information;
• lawful activities of government employees; and,
• access to works by non-profit libraries, archives or educa-
tional institutions for the purpose of making acquisition
decisions.
However, the FTA allows for the establishment of exemptions
and limitations to address specific situations and activities:
Article 17.7.5(d)(i): “…when an actual or likely adverse
effect on non infringing uses with respect to a particular
class of works or exceptions or limitation to copyright or
related rights with respect to a class of users is demonstrat-
ed or recognized through a legislative or administrative
proceeding established by law, provided that any limitation
or exception adopted in reliance upon this subparagraph …
shall have effect for a period of not more than three years
from the date of conclusion of such proceeding.”
The US industry, in general, expressed some degree of dissat-
isfaction about this type of limitation in the FTA. Comparing
it with the outcome of the CAFTA negotiations, it has stated:
“The requirement that the CAFTA countries implement protection for technological protection measures (TPMs)used by right holders to protect against unauthorizedaccess and exploitation of their works to do so in virtually
the same manner as did the U.S. in the DMCA in 1998. Inaddition, the text provides for a list of narrowly craftedexceptions – in close consistency with how the U.S.Congress approved those exceptions in U.S. law (Article
15.5.7). We applaud the negotiators for curing some of thedisturbing omissions from the Chile FTA text”225.
While the DMCA makes the US Copyright Office the agencyin charge of conducting the proceedings, the FTA states thatthe limitations or exceptions should be recognized through alegislative act, where there may be more possibilities of craft-ing new exemptions, as legislatures are usually more sensitive
to demands from civil society. Despite these exceptions,many other reasons for circumventing are left out226.
Finally and probably because of the complexity of dealingwith TPMs, these provisions have five years for its full imple-mentation, the longest term allowed by the FTA (Box 6).
6. Rights management information
The FTA protects Rights Management Information (RMI)227
in terms very similar to those in the WCT 228 and the WPPT229.
The difference is that it provides for civil sanctions and for criminal sanctions when the prohibited acts are done wilfullyand for commercial advantage230. These protective measureshave also received strong criticisms in the USA particularly by civil society and academia231.
3.3.4 Protection of satellite signals
The FTA232 obliges the Parties to ratify before 1st of January2009, the Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite, agreed
in Brussels on 21 May 1974233 (the Brussels Convention)234,which entered into force on 25 August 1979235.
The Brussels Convention provides that each contracting
34
225IFAC-3-CAFTA, 2004, p 10
226Samuelson, 1999
227 Article 17.7.6 (b), FTA, Rights management infor-mation means:
“(i) information which identifies a work, performance,or phonogram; the author of the work, the performer of the performance, or the producer of the phono-gram; or the owner of any right in the work, perform-ance, or phonogram;
(ii) information about the terms and conditions of the
use of the work, performance, or phonogram; and(iii) any numbers or codes that represent such infor-mation,
when any of these items is attached to a copy of thework, performance, or phonogram or appears inconjunction with the communication or making avail-able of a work, performance, or phonogram to thepublic. Nothing in paragraph 6(a) requires the owner of any right in the work, performance, or phonogramto attach rights management information to copies of the owner’s work, performance, or phonogram or tocause rights management information to appear inconnection with a communication of the work, per-formance, or phonogram to the public.”
228 Article 12, WCT
229 Article 19, WPPT
230 Article 17.7.6 (a), FTA: “In order to provide ade-quate and effective legal remedies to protect rightsmanagement information: (a) each Party shallprovide that any person who without authority, andknowing, or, with respect to civil remedies, havingreasonable grounds to know, that it will induce,enable, facilitate, or conceal an infringement of anycopyright or related right, (i) knowingly removesor alters any rights management information; (ii)
distributes or imports for distribution rights manage-ment information knowing that the rights manage-ment information has been altered without authori-ty; or (iii) distributes, imports for distribution,broadcasts, communicates, or makes available tothe public copies of works or phonograms, know-ing that rights management information has beenremoved or altered without authority, shall beliable, upon the suit of any injured person, and sub- ject to the remedies in Article 17.11(5). Each Partyshall provide for application of criminal proceduresand remedies at least in cases where acts prohibit-ed in the subparagraph are done willfully and for purposes of commercial advantage. A Party mayexempt from criminal liability prohibited acts done in
connection with a nonprofit library, archive, educa-tional institution, or broadcasting entity establishedwithout a profit-making purpose.”
231Okedji, 2004
232 Article 17.1.3(c), FTA
233The Convention was adopted by the InternationalConference of States on the Distribution of Programme-Carrying Signals, transmitted bySatellite, convened jointly by the United NationsEducational, Scientific and Cultural Organization
and WIPO. The Conference held discussions onthe basis of the Draft Convention drawn up by theCommittee of Governmental Experts on Problemsin the Field of Copyright and of the Protection of Performers, Producers of Phonograms andBroadcasting Organizations Raised byTransmission via Space Satellites held at Nairobi(Kenya) from 2 to 11 July 1973
234In no other bilateral trade treaty recently negotiat-ed by Chile (with Mexico, EFTA, EU or Korea),there exists a similar obligation to become member of the Brussels Convention
235 As of March 2004, 26 States were Members of the Convention. The USA acceded on 7 March1985
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Party shall take adequate measures to prevent the unautho-
rized distribution in or from its territory of any programme-
carrying signal transmitted by satellite. The said Convention
(Article 8) permits specific reservations to members, under
special circumstances, which are not excluded from the FTA.
In addition to the obligation to become a party to the
Brussels Convention and the obligations deriving from that
treaty, the FTA provides for further complementary relatedenforcement obligations.
First, acts such as the manufacture, assembly, modification,
import, export, sale, lease or distribution of a tangible or
intangible device or system, may be considered either a civil
or criminal offence if the person concerned knows that the
principal function of the device or the system is solely to
assist in decoding an encrypted programme-carrying satellite
signal without being duly authorized. The knowledge of the
principal function of the device or system may be demon-
strated through reasonable evidence, taking into account the
facts and circumstances surrounding the alleged illegal act.
Also the wilful reception or further distribution of anencrypted-programme-carrying satellite signal knowing that
it has been decoded without the authorization of the lawful
distributor shall be considered either a civil or a criminal
offence.
Each Party shall provide that any person injured by any of
the activities described above, including any person that
holds an interest in the encrypted programming signal or in
the content of that signal, shall be permitted to initiate a civil
action because of that infringement.
It was during the negotiations of the NAFTA that a similar
provision was first introduced236 in trade agreements. While
in the FTA237
, as we have seen, the offences may be of a civilor a criminal nature238, in NAFTA the offences are of a crim-
inal and civil nature depending on the conduct.
3.3.5 Domain names in the Internet
In order to be identified, each computer connected to the
Internet has a numerical address called an “Internet
Protocol”. Because combinations of numbers are easy to for-
get, Internet Protocol addresses are converted into letters and
numbers in order for people to remember them. This
(alphanumeric) result is called a “domain name”, which usu-
ally will be composed of two parts. The first one being the
main name, usually the name of a firm, person, country, or
city, followed by a dot, and a suffix, such as com, org, edu,
or biz. The suffix in the domain name is called a Top Level
Domain (TLD). Every Internet address has one TLD that
corresponds to the last part of the domain name239 (Box 10).
The FTA provisions on domain names in the Internet deal
with settlement of disputes and transparency in the manage-
ment of country code top level domains (ccTLD). On the set-
tlement of disputes it provides:
Article 17.3.1: “Each Party shall require that the manage-
ment of its country-code top level domain (ccTLD) pro-
vide an appropriate procedure for the settlement of dis-
putes, based on the principles established in the Uniform
Domain-Name Dispute-Resolution Policy (UDRP), in
order to address the problem of trademark cyber-piracy.”
35
236 Article 1707, NAFTA
237 Article 17.8, FTA: Protection of Encrypted
Program-Carrying Satellite Signals “1. Each Party
shall make it: (a) a civil or criminal offense to
manufacture, assemble, modify, import, export,sell, lease, or otherwise distribute a tangible or
intangible device or system, knowing that the
device or system’s principal function is solely to
assist in decoding an encrypted program-carrying
satellite signal without the authorization of the
lawful distributor of such signal; and (b) a civil
or criminal offense willfully to receive or further
distribute an encrypted program-carrying satellite
signal knowing that it has been decoded without
the authorization of the lawful distributor of the
signal. 2. Each Party shall provide that any per-son injured by any activity described in subpara-
graphs 1(a) or 1(b), including any person that
holds an interest in the encrypted programming
signal or the content of that signal, shall be per-
mitted to initiate a civil action under any measure
implementing such subparagraphs.”
238CAFTA (Article 15.8), US-Australia FTA(Article
17.7) and US-Singapore FTA (Article 16.6) contain
a similar approach to that provided under the
NAFTA. The Chile–Mexico FTA provides only for civil sanctions (Article 15-12).
239For example, www.chileusfta.org could be the
domain name of an organization devoted to the
study of the FTA between Chile and the US,
where “.org,” for organization, would be the TLD.
Box 10: Top Level Domain (TLD)
There are two kinds of TLDs: generic TLD (gTLDs) and country
code TLD (ccTLDs). Generic TLDs, (e.g., .com, .org, .net, .edu,
.biz,. name, .pro, .gov or .edu) can be used, with some excep-
tions, by anyone in the world and are administrated globally.
Country code TLDs, on the other hand, are used to identify a
particular country or geographic area, and are managed locally
in the respective country. They are two letter country names
based on the ISO 3166-1 country codes. The USA ccTLD is
“.us”, while Chile´s is “.cl.”. The management of ccTLDs rests in
local Network Information Centers (NICs) by delegation of the
Internet Assigned Numbers Authority (IANA), which is part of the
Internet Corporation for Assigned Names and Numbers (ICANN).
The latter is a private corporation in charge of the technical man-
agement functions of the Internet. According to the 1998 White
Paper, ICANN is the organization responsible for overall coordi-
nation of the Domain Name System (DNS), together with other
technical functions. As administrators of ccTLDs, NICs must,
together with registering domain names under the respective
ccTLD, provide for procedures for the settlement of disputes.It is very common that two or more persons are interested in
registering the same domain name. In the real world, two differ-
ent persons are allowed to use and register the same name or
trademark for identifying completely different products or servic-
es. In the Internet, no two domain names are the same, they are
unique. While two persons may be using and may have regis-
tered “Apple” as a trademark, one for designating a computer
company and the other to designate a record label, in the world
of the Internet there may be only one domain name called
www.apple.com. But people do not always fight over the same
domain name for legitimate purposes. Some people buy several
domain names, which contain well-known trademarks, to sell
them to people who own the trademarks in the real world, proba-
bly at much higher prices than what it normally costs. This prob-
lem has been called cyberpiracy or cybersquating.
Source: ICANN
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The FTA does not specify the precise rules on which the
“appropriate procedures for the settlement of disputes”
should be based. However, it could be assumed that the
Parties should provide for procedures based on the “princi-
ples” of the UDRP (see Box 11) but not necessarily the
“Rules for UDRP”, which are a series of very detailed pro-
cedural rules, stating when, where and how a complaint
should be made, and when, where and how the complaint
should be answered. The UDRP went into effect on 1
December 1999.
The FTA240 leaves space for each Party to determine whether
disputes surrounding trademark cyberpiracy in its gTLD will
be resolved by applying the UDRP itself, or a Local Dispute
Resolution Policy (LDRP). This provision is substantially
different from the one proposed by the USA in the FTAA
negotiations241 and presumably submitted and proposed to
Chile at the beginning of the negotiations242, in the sense that
participation in ICANN´s UDRP would have been mandato-
ry for each Party’s Network Information Centers (NIC).
In this area, the FTA does not introduce any major innova-
tion. Both countries, long before the launching of the negoti-
ations243, had already implemented policies in line with the
standards set forth in the FTA.
Neither Chile’s Procedure of Mediation and Arbitration, nor
the US DRP prevent parties of a domain name dispute from
filing a suit in a jurisdictional court. Moreover, Parties are
free to regulate the problem of cyberpiracy in their domestic
laws by establishing special procedures to deal with this
issue. The USA did this by enacting the Anti-cybersquatting
Consumer Protection Act (ACPA), which “is a US federal
law enacted in 1999 to protect the owners of trademarks
from abuse by domain name cybersquatters”244.
Because the text of the FTA limits the application of the pro-
cedure based on the principles of the UDRP to the problem
of trademark cyber-piracy245, many other types of domain
disputes are left out of this system. For instance, the FTA246
would exclude disputes between legitimate trademark own-ers, disputes regarding personal names (other than those pro-
tected as trademarks), defamation, dilution of trademarks,
and depending on whether a Party protects GIs through
trademarks, they could choose to apply or leave out GIs from
the provision in question.
Of course both countries are free to apply whichever system
of dispute settlement they choose to these other types of
questions, be it the UDRP or a LDRP as is currently the case.
In fact, Chile’s domestic law247 allows the procedure to be
used against an abusive registration, when the registered
domain name is identical or confusingly similar to a name by
which the claimant is known.The UDRP and other LDRP have been criticized as over-
reaching. Although their main purpose is to combat trade-
mark cyberpiracy, the procedures are often used to suppress
free speech or competition.248
36
240 Article 17.3.1, FTA
241 Article 13, draft Chapter on IP, states that: “Each
Party shall have its domestic Network Information
Centers (NICs) participate in the ICANN Uniform
Dispute Resolution Procedure (UDRP) to address
the problem of cyber-piracy of trademarks”
See the Chapter at http://www.ftaa-
alca.org/FTAADraft03/ChapterXX_e.asp
242
See US proposal on Domain Names in theInternet published in Chile´s NIC web page at
http://www.nic.cl/Board/2001-2/alca.html. Note that
the original US proposal provided for an extra
obligation, which is not included in the final text,
but made its way into the US - Singapore FTA:
“Each Party shall participate in the Government
Advisory Committee (GAC) of the Internet
Corporation for Assigned Names and Numbers
(ICANN) to promote appropriate country code Top
Level Domain (ccTLD) administration and delega-tion practices and appropriate contractual relation-
ships for the administration of ccTLDs in the
Hemisphere”. The draft of the FTAA Chapter on
IPRs has a similar provision
243The DRP used by the administrator of the “.us”
ccTLD is the usTLD Dispute Resolution Policy or usDRP (Approved by the US Dept. of Commerce
on February 21, 2002). In every aspect it is very
similar to the UDRP. In Chile the DRP is called
Procedure for Mediation and Arbitration, a LDRP
implemented in 1997 and considered a pioneer in
the world. It is also very similar to the UDRP with
some minor differences, such as providing for an
opposition period after the filing of a domain; par-ties may also resort to mediation before going to
arbitration; and arbiters may be subject to a disci-plinary appeal to a jurisdictional court. For a more
detailed description of the differences between the
UDRP and the Procedure of Mediation and arbi-
tration, go to http://www.nic.cl/Board/2001-
2/alca.html
244See Chilling Effects at http://www.chillingef-
fects.org/acpa/
245To date, there is no treaty definition of cyber-piracy, although there is consensus that it covers
at least bad faith registration of a domain name
identical or confusingly similar to a trademark or
service mark. According to the Final Report of the
WIPO Internet Domain Name Process (FirstProcess) para. 170, cyber-piracy would be a con-
cept associated to copyright infringement in the
web. See
http://wipo2.wipo.int/process1/report/finalreport.ht
ml
246 Article 17.3.1, FTA
247Regulation for the Functioning of the Register
for CL Domain Names.
Article 22) “It will be a cause for revocation of a
domain name that its registration was abusive, or
that it was made in bad faith. The registration will
be considered abusive when the domain name is
identical or confusingly similar to a trademark or
service or mark in which the claimant has rights,
or to a name by which the claimant is known.”
(Translation of article by the author)
248The practice of trademark holder engaging in
bad faith litigation, including DRPs, to deprive
legitimate owners of their domain names, is called
“reverse domain name hijacking.”
Box 11: The UDRP
The UDRP provides that certain types of disputes must be sub-
mitted to a mandatory administrative proceeding which will be
activated if a complainant asserts that (i) the “domain name is
identical or confusingly similar to a trademark or service mark in
which the complainant has rights; (ii) that the registrant has “no
rights or legitimate interests in respect of the domain name”; and
that (iii) the “domain name has been registered and is being
used in bad faith”.
After establishing the above three-pronged test the UDRP
describes, non-exhaustively, some presumptions of bad faith,
such as acquiring the domain name primarily for the purpose of
selling, renting, or transferring the domain to the owner or a
competitor of a trademark; registering the domain to prevent a
trademark owner from reflecting the mark in that domain; regis-
tering the trademark to disrupt the business of a competitor; or
creating likelihood of confusion with the complainant’s mark by
attracting customers to your website.
Finally, remedies in the UDRP are limited to cancellation, trans-
fer or changes in the domain in question.
Source: https://www.wsmdomains.com/URDP.html
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The second guiding principle in this area relates to trans-
parency. The relevant provision states:
Article 17.3.2: “Each Party shall, in addition, require that
the management of its respective ccTLD provide online
public access to a reliable and accurate database of contact
information for domain-name registrants, in accordance
with each Party’s law regarding protection of personal
data.”In both the USA and Chile, the NICs comply with this obli-
gation of having a ”whois”249 database. Regarding protection
of personal data, this is an obligation that each Party should
comply with, according to its own domestic law. While
CAFTA has the same provision on transparency, the US free
trade agreements with Australia, Singapore and Morocco
refer only to having a “whois” database, but no reference is
made to the protection of personal data.
3.3.6 Identification signs: trademarks and GIs
1. Main features of the trademarks provisions
Because of both Parties particular interest in this category of
protection, the provisions on trademarks were thoroughly
discussed during the FTA negotiations. Chile, with only 15
million people, is worldwide a country with more registered
trademarks than a number of developed countries. Great
emphasis was given in the discussions to certification and
collective marks and to the different trademark systems in
place in Chile and the USA. Difficulties did arise with GIs,
because in the USA GIs are generally protected under trade-
mark law. In fact, according to the FTA:
Footnote 3 to Article 17.2.1: “Ageographical indication is
capable of constituting a trademark to the extent that the
geographical indication consists of any sign, or combina-
tion of signs, capable of identifying a good or a service asoriginating in the territory of a Party, or a region or local-
ity in that territory, were a given quality, reputation, or
other characteristic of the good or service is essentially
attributable to its geographical origin.”
According to the FTA250, trademarks shall include collective,
certification and sound marks251 and may include GIs and
scent marks. This means that there are at least three cate-
gories of marks that should be protected, namely, collective,
certification and sound marks. But, there are two further cat-
egories of signs for which protection as a trademark is not
mandatory – i.e., GIs and scent marks. This is a TRIPS-plus
and even NAFTA-plus standard because the protection of
certification marks is not mandatory under those agreements.
In the recent US agreement with Australia, protection for
collective and certification marks is also mandatory and GIs
are eligible for protection as a mark. Sound and scent marks
are not included in this latter agreement. However, the US
agreements with Jordan, Singapore and CAFTA have a sim-
ilar provision to the FTA.
In the FTA, certification marks do not need to be recognized
as a separate category of trademark, but the sign as such
should be protected as an ordinary trademark.
The TRIPS Agreement provides that the use of a trademark
in the course of trade shall not be unjustifiably encumbered
by special requirements252. Pursuant to this, the FTA further
provides that each Party shall ensure that any measure man-
dating the use of a term customary in common language, as
the “common name” for a good, does not impair the use or effectiveness of trademarks used in relation to such good253.
This provision seems to build upon TRIPS (Article 20), by
permitting that the use of a trademark shall not be unjustifi-
ably encumbered. It states that where the use of a generic
name is required, its use shall not impair the effectiveness of
the trademark. This could be the reason why in the US agree-
ment with Singapore a footnote was added to clarify that the
relevant provision was not intended to affect the use of com-
mon names of pharmaceutical products in prescribing medi-
cines254.
Consistent with TRIPS255, the FTA256 provides that the trade-
mark owner shall have the exclusive right to prevent others,without his consent, from using in the course of trade identi-
cal or similar signs257. Nevertheless, there are two important
differences when compared with the TRIPS Agreement.
First, trademark owners shall have the right to prevent third
parties without their consent, from using in the course of
trade identical or similar signs, “… including subsequent
geographical indications….”. This addition makes sense, as
GIs are capable of constituting a trademark, according to the
37
249In the case of Chile, see http://www.nic.cl/cgi-bin/dom-CL?q=whois
250 Article 17.2.1, FTA
251Note that Chile agreed to protect sound marks
because in the country there were a number of
melodies associated to local products, services or
enterprises. Well known is the case of ENTEL’s
chime, a telephone services provider, which
sounds when that enterprise is chosen as a carri-er for calls outside of Chile.
252 Article 20, TRIPS
253 Article 17.2.3, FTA
254 Article 16.2.6, US-Singapore FTA, footnote 16-7
255 Article 16. 1, TRIPS: “The owner of a registered
trademark shall have the exclusive right to prevent
all third parties not having the owner’s consent
from using in the course of trade identical or simi-
lar signs for goods or services which are identical
or similar to those in respect of which the trade-
mark is registered where such use would result ina likelihood of confusion. In case of the use of an
identical sign for identical goods or services, a
likelihood of confusion shall be presumed. The
rights described above shall not prejudice anyexisting prior rights, nor shall they affect the possi-
bility of Members making rights available on the
basis of use.”
256 Article 17.2.4, FTA
257Note that TRIPS and NAFTA have equivalent
drafting on this matter. Nevertheless, the wording
in the FTA is similar to the one contained in the
US-Australian FTA ( Article 17.2.4), CAFTA (Article15.2.3), US-Jordan FTA (Article 4.7) and the US-
Singapore FTA (Article 16.2.2)
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FTA. Secondly, the right of the title holder is not only
extended to products or services which are identical or simi-
lar to those for which the trademark is registered, but also to
goods or services “… that are related to those goods or serv-
ices in respect of which the trademark is registered, where
such use would result in a likelihood of confusion.”
Likelihood of confusion is a matter to be determined by the
domestic trademark law
258
. Examples of related-goods could be a trademark for medical equipment used also for medical
uniforms; or a sushi related trademark later used for chop-
sticks.
According to the FTA259, goods or services may not be con-
sidered as being similar or being dissimilar from each other
simply on the grounds that, in any registration or publication,
they appear in the same classes or in different classes of any
classification system, including the Nice classification260.
The latter provision permits domestic administrative and
judicial authorities to apply a broader criterion when estab-
lishing similarity or identity of signs for products or servic-
es. Usually, there would be a strong presumption in favour of concluding that goods that are in a similar class are at least
similar, and that goods that are in different classes probably
are dissimilar. Chile is not part of the Nice Agreement
Concerning the International Classification of Goods and
Services for the Purposes of Registration of Marks (Nice
Agreement)261, but in its Association Agreement with the EU,
Chile committed to accede to the Nice Agreement by the 1
January 2007.
The FTA allows the Parties to adopt limited exceptions to the
rights conferred by a trademark, provided that such excep-
tions take account of legitimate interests of the owner of the
trademark and of third parties262
. These limitations shouldrefer to the different categories of trademarks recognized in
the Agreement, namely collective marks, certification marks
and sound marks, as well as GIs (when protected as a trade-
mark) and scent marks, in case the Parties wish to protect
them. The inclusion of certification marks and sound marks
could be one of the reasons why the chapter reproduces, lit-
erally, the relevant TRIPS provision on exceptions to the
rights conferred to the trademark owner, without any modifi-
cation or addition263.
Parties shall afford an opportunity for interested parties to
oppose the application of a trademark 264. Again compared to
the TRIPS Agreement, which leaves it to the Parties to
decide whether they will allow for oppositions, the FTA goes
a step further and makes this an obligation on the Parties 265.
No parallel provision to that in the TRIPS Agreement on the
minimum duration of a trademark and its renewal266 is found
in the FTA. This is not the case in the agreements of the USAwith Australia, Morocco and CAFTA, which provide for a
minimum of 10 years instead of seven years as provided for
in TRIPS.
Reportedly, an additional issue discussed during the negotia-
tions was the prohibition of the requirement to record trade-
mark licences to establish the validity of such a license.
While both TRIPS and the FTA say nothing about recording
of trademark licenses, a provision of this nature is found in
the trade agreements of the USA with Australia, CAFTA267,
Jordan, Morocco and Singapore.
2. Special protection to well-know trademarks
The FTA268 gives particular attention to the standards of pro-tection concerning well-know marks. As in TRIPS269, the
level of protection is the same as that provided under the
Paris Convention for the Protection of Industrial Property
(1967)270, but covering both products and services. In the
FTA non-registered well-known marks also benefit from
such protection against dilution. A similar provision is found
in the US agreements with CAFTA, Jordan, Singapore,
Morocco and Australia.
The FTA271 also goes beyond the TRIPS Agreement in vari-
ous respects when providing for additional measures of pro-
tection of well-known trademarks. It states that according to
its domestic legislation, Parties shall provide for appropriatemeasures to prohibit or cancel the registration of a trade-
mark, identical or similar to a well-known trademark, if the
use of that trademark by the registrant applicant:
• is likely to cause confusion, or
• to cause mistakes, or
• to deceive, or
• risk associating the mark with the owner of the well-
know trademark, or
38
258Footnote 4, FTA
259 Article 17.2.12(b), FTA
260 A similar provision is contained under CAFTA
(Article 15.2.8(b))
261The Nice Agreement was concluded on June
15, 1957 under the auspices of WIPO. It was
revised at Stockholm on July 4, 1967 and at
Geneva on May 13, 1977 and amended onSeptember 28, 1979. In January 2004, 72 States
were party to the Agreement but other countries
and at least three organizations and the
International Bureau of WIPO actually use the
Nice Classification. In order to keep the Nice
Classification up to date, it is continuously revisedunder a Committee of Experts set up under the
Agreement and a new edition is published every
five years. The current (eighth) edition of the said
International Classification has been in force since
1 January 2002
262 Article 17.2.5, FTA
263 Article 17, TRIPS, appears replicated in NAFTA
(Article 1709.12), US-Australia FTA ( Article17.2.5), CAFTA (Article 15.2.4) and USA-
Singapore FTA (Article 16.2.3)
264 Article 17.2.5, FTA
265 Article 15. 5, TRIPS, provides that ”… Members
may afford an opportunity for the registration of atrademark to be opposed.”
266 Article 18, TRIPS
267 Article 15.2.10, CAFTA: “No party shall require
recordal of trademark licenses to establish the
validity of the license, to assert any rights in a
trademark, or for other purposes.”
268 Article 17.2.6, FTA
269 Article 16.3, TRIPS
270 Article 6bis, Paris Convention
271 Article 17.2.7, FTA
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• constitutes unfair exploitation of the reputation of the
trademark.
These appropriate measures shall be adopted for a trademark
that is identical or similar to a well-known trademark, pro-
vided that at least one of the above-mentioned situations
exists. Of course these measures to prohibit or cancel regis-
tration should not apply when the registration applicant is the
owner of the well-known mark.On the nature of the measures to be taken, whether this addi-
tional protection should apply ex-officio or at the request of
an interested party, as well as the precise meaning of the dif-
ferent situations described above, are all issues to be
resolved under the domestic legislation of the Parties.
In determining whether a trademark is well known the
TRIPS Agreement272 obliges Members
“… to take account of the knowledge of the trademark in
the relevant sector of the public, including knowledge in
the Member concerned which has been obtained as a
result of the promotion of the trademark.”
The FTA goes further by clarifying that “… a Party shall not
require that the reputation of the trademark extend beyond
the sector of the public that normally deals with the relevant
goods or services”273. While the TRIPS provision permits
WTO Members to take into account the reputation of the
trademark beyond the relevant sector of the public, the FTA
clearly does not.
Finally, a major feature in the protection of well-known
marks is the recognition of the importance274 of the Joint
Recommendation on the Protection of Well-Known Marks275.
The Parties commit themselves to be guided by the princi-
ples contained in this Recommendation. No parallel provi-
sion is found in the US agreements with Jordan, CAFTA and
Australia. In the case of the US agreement with Singapore
there is a more specific obligation to give effect to articles 1
to 6 of the said Joint Recommendation276, which are the sub-
stantive provisions of the Recommendation. Besides the six
articles, the Recommendation provided for some explanato-
ry notes. This type of incorporation in binding agreements of
joint recommendations adopted by governments in interna-
tional organizations has been highlighted as an important
development in international law by acknowledging “soft
law” instruments in legally binding instruments. Aparallel to
this development could be the relevance and impact of theDoha Declaration on Public Health referred to in the
Preamble to Chapter 17 of the FTA.
3. Common provisions for the registration of trademarks
The FTA contains a number of provisions about the trade-
mark registration system to:
• establish basic formal requirements affecting decisions
and notifications;
• modernize the registration system by using electronic
means; and,
• encourage the use of the International Classification
contained in the Nice Agreement277.
No similar provisions are found under the NAFTA or in the
US agreements with Jordan and Singapore, but they do
appear in the agreements with Australia 278 and CAFTA279.
The substance of the obligations regarding the registration of
trademarks contained in the FTA is already included in the
enforcement provisions of the TRIPS Agreement; however,
the latter provisions are less burdensome and more flexibly
drafted than those in the FTA.
On the establishment of formal requirements affecting deci-
sions and notifications, the Parties shall provide a system for its registration and make available transparent procedures to
provide guaranties of due process. These requirements are
summarized in Box 12.
Another important obligation of the Parties, aimed at
improving the registration system for trademarks, is to pro-
vide, to the maximum degree practical, a system for elec-
tronic application, processing, registration and maintenance
of trademarks. Both the USA and Chile already provide for
on-line registration of trademarks.
A further obligation on the registration of trademarks relates
to the encouragement “to classify goods and services”
according to the Nice Agreement. In addition, each registra-
tion or publication concerning a trademark application or
registration and which indicates the relevant goods or servic-
es shall indicate the goods and services by their names.
In those cases where the full implementation of the obliga-
tions requires a Party to amend its domestic legislation or
additional financial resources, those amendments and addi-
tional resources should be in force or available as soon as
practicable, as in the case of the trademarks provisions of the
FTA and in no event later than two years from the date of
entry into force of the bilateral agreement280.
4. Geographical indicationsAlthough Chile and the USA have advocated similar posi-
tions and submitted joint proposals281 within the Council for
39
272See second sentence of Article 16.2, TRIPS
273 Article 17.1.8, FTA
274 Article 17.1.9, FTA
275See WIPO 2000, Joint Recommendation. This
was seen as the first implementation of WIPO’s
policy to adapt to the pace of change in the field
of industrial property by considering new options
for accelerating the development of international
harmonized common principles.
276 Article 16.1.2(b), US-Singapore FTA
277 As mentioned above, although Chile is not a
Member to the Nice Agreement Concerning the
International Classification of Goods and Services
for the Purposes of the Registration of Marks, for
many years it has classified trademarks according
to this treaty. See the Chilean Regulations under
the Industrial Property Law, notified as a WTOdocument IP/N/1/CHL/I/5
278 Article 17.2.7, US-Australia FTA
279 Article 15.2.6, CAFTA
280 Article 17.12.2(a), FTA. See also discussion
under provisional arrangements, above
281WTO documents IP/C/W/ 395, 386, 289, avail-able at http://www.wto.org
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TRIPS, some differences remain between both countries
over the scope and the means of protection available for geo-
graphical indications (GIs).
Based on information given by its Members, the WTO
Secretariat has identified three broad categories of systems to
protect GIs282: (i) laws focusing on business practices; (ii)
trademark law, and (iii) special means of protection. More
than one of these means may be available at the same time in
a certain country to grant protection for GIs.
Laws focusing on business practices normally prohibit those
practices which may involve the misuse of a GI such as acts
involving the use of a GI which contravenes the standards
provided for under unfair competition, consumer protection
or other similar laws. To gain protection under this system
there is no need for any prior recognition of the GI. It seems
that Chile and the USA have this option available under their
domestic legislation on unfair competition.
The second category corresponds to the protection of GIs
under trademark law, which basically provides for two types
of protection: against the registration and use of a GI as a
trademark and/or against unauthorized use by third parties283.
Again, the USA and Chile seem to have available these
means of protecting GIs, but with some important differ-ences. While in the US geographical indications may be pro-
tected as collective or certification marks, in Chile a name
consisting of a GI, cannot be protected as a trademark.284.
Finally, the third category is a sui generis system, which
refers to special and specific dedicated laws for the protec-
tion of GIs. It constitutes the current and prospective Chilean
approach for the protection of both domestic and foreign
GIs285. In the USA, although wines and spirits are protected
through trademark law, special administrative regulations arealso in place286.
Besides the framework of protection under the section on GIs,
to protect their own indications, Chile and the USA agreed to
follow the same approach as provided for under the NAFTA
and protect them as distinctive products. Thus, Chapter Three
of the FTA dealing with “National Treatment and Market
Access for Goods” governs particular GIs287 (Box 13).
One superficial reading of this mutual obligation is that
recognition of specific GIs in the Market Access Chapter
instead of listing the same specific GIs in the IP Chapter, is
to ensure that listed GIs will be granted only market access,
respectively, to the USA and Chile. However, the provisions
of the Market Access Chapter go beyond access and provide
a strong protection to the listed geographic terms. In fact,
besides allowing for the importation of the listed products,
the Parties committed themselves to ban the sale of the unau-
thorized products bearing those GIs within their territories.
The FTA288 provides exactly the same definition of GI as the
one provided in the TRIPS Agreement289. Nevertheless, a sec-
ond sentence was added to the relevant paragraph, which
makes the concept much broader than the one contained in
the TRIPS Agreement. In effect, to allow the protection of GIs under the trademark system, a second sentence was
40
282WTO Review Under Article 24.3, 2003, p 7
283WTO Review, 2003, p 11
284 Article 20(e) and (f), Chilean Law No. 19.039
285Currently Chile only protects certain GIs for
domestic wines and spirits through special laws,
regulations and decrees. A draft law is pending in
the Chilean Parliament, which will provide a sui
generis means of protection of domestic and for-eign GIs through a registry
286NAFTA and the bilateral agreements of the USArespectively with Jordan, Australia and Singapore
do not include detailed provisions on GIs, as is
the case of the FTA and CAFTA. Nevertheless,
not all the provisions regarding the protection of
GIs have a similar drafting. The recent agreement
with Morocco, Chapter 15, also covers GIs
287 Article 3.15, FTA
288First sentence of article 17.4.1, FTA:
“Geographical indications, for the purposes of this Article, are indications which identify a good as
originating in the territory of a Party, or a region or
locality in that territory, where a given quality, rep-
utation, or other characteristic of the good is
essentially attributable to its geographical origin.”
289 Article 22.1, TRIPS
Box 12: Formal requirements affectingdecisions and notifications in trademarksprocedures
(a) provide to the applicant a communication in writing (electroni-
cally if possible) of the reason for any refusal to register the
trademark. This obligation is consistent and complements those
referred under the TRIPS Agreement (Articles 41.3 and 49)
(b) provide to the applicant an opportunity to respond to commu-nications from the trademark authorities, contest an initial
refusal and appeal judicially any final refusal to the register of
the trademark. In the TRIPS Agreement there is no obligation
for Members to provide an opportunity, neither to respond
communications from the trademark authorities, nor to con-
test an initial refusal. Nevertheless, similar provisions are
already contained under the Chilean trademark law. The obli-
gation for review of final administrative decisions by a judicial
authority is already in the TRIPS Agreement (Article 41.4).
(c) include a requirement that decisions in opposition or cancel-
lation proceeding be reasoned and in writing. According to
the TRIPS Agreement (Article 62.4) opposition or cancellation
procedures shall be governed by paragraphs 2 and 3 of
Article 41; this means that decisions “shall preferably be in
writing and reasoned”.
Box 13: Mutual obligation to the
protection of particular GIs
According to the FTA, Chile shall recognize “Bourbon Whiskey”
and “Tennessee Whiskey” as distinctive products of the USA andChile shall not permit the sale of any product with those names
within its territory, unless it has been manufactured in the USA in
accordance with its domestic laws and regulations governing the
manufacture of those products.
On the other hand, the USA shall recognize “Pisco Chileno”
(Chilean Pisco), “Pajarete” and “Vino Asoleado” as distinctive
products of Chile, and the USA shall not permit the sale of any
product with those names within its territory, unless it has been
manufactured in Chile in accordance with its domestic laws and
regulations governing the manufacture of those products.
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included in the FTA. This extends the possibility that a trade-
mark – in the approach followed by the USA, which includes
collective and certification marks – could be protected as a
GI. In doing so, part of the definition of trademarks has been
included in the FTA by providing that:
Article 17.4.1: “…Any sign or combination of signs (such
as words, including geographical and personal names, let-
ters, numerals, figurative elements, and colors)290
in anyform whatsoever shall be eligible for protection or recog-
nition as a geographical indication”291.
While the TRIPS Agreement preserves a clearer distinction
between trademarks and GIs as different categories of IPRs,
the FTA seems to bring them closer.
The new definition given in the FTA is extremely broad and
might produce some unexpected consequences. For exam-
ple, any WTO Member could request Chile or the USA,
according to the MFN principle, to extend protection to signs
or combination of signs as GIs. While the trademark ele-
ments added to the GIs definition might broaden the scope of
denominations protected via GIs, this may be at the expenseof indiscriminate filing and registration of GIs. Because the
standard of protection for GIs in TRIPS is rather objective, in
the sense that the good must have originated in a certain ter-
ritory and a given characteristic of the good must be attribut-
able to that origin, one could assume that the registration
should be more or less automatic. Yet GIs protected through
trademarks must still be subject to the distinctiveness or sec-
ondary meaning test, because GIs are essentially descriptive
terms (i.e. non-inherently distinctive).
A new distinction concerning the legal means that each Party
should provide to the other to protect GIs was introduced in
the FTA
292
. Chile shall provide the legal means to identifyand protect GIs of “United States persons” that meet the cri-
teria contained in the common definition of geographical
indications. However, the USA shall provide the legal means
to identify and protect Chilean GIs that meet the criteria con-
tained in the common definition. The difference lays in the
use of the concept “person” contained in the obligation by
Chile. Because, as explained earlier, the USA protects GIs
through a system of collective and certification trademarks,
the owners of the US indications are usually legal persons.
For all purposes, the FTA defines “person”293, as “a natural
person or an enterprise”. On the contrary, to-date, Chile pro-
tects its GIs through specific laws and regulations, and tech-
nically, the owner of the Chilean GIs is the Chilean State
because GIs - at least in the wine and spirit sectors - are cre-
ated through Presidential Supreme Decrees294. Thus, for pur-
poses of the GI provisions, a footnote295 states that – besides
natural persons and enterprises – “persons of a Party shall
also mean government agencies” which means that in the
case of Chile (and eventually the USA), government agen-
cies may file for GIs in the USA (or Chile) on behalf of the
Chilean State.
Due to the same considerations, a special provision was
included in the FTA for those GIs relating to wines and spir-
its. It means Chile shall provide to the GIs of the USA the
same recognition as Chile accords to wines and spirits under
the Chilean GI system. This provision might be considered
redundant because of the national treatment principle in theAgreement. The USA shall provide to Chilean GIs the same
recognition as the USA accords to wines and spirits under the
Certificate of Label Approval system as administered by the
Alcohol and Tobacco Tax and Trade Bureau of the
Department of Treasure or any successor agencies, notwith-
standing the provisions of the US Trademark Act296.
Additional provisions in the FTA aim at:
• Simplifying formalities for the protection or registration
of GIs297;
• Providing publicity and transparency of the regulations
pertained thereto
298
;• Establishing opposition procedures and guidelines
regarding the processing of application or petitions299;
and,
• Establishing special grounds for refusing protection of
GIs by favouring pre-existing trademarks300.
41
290The bracketed clarification it is not in CAFTA but
does exist in the US- Morocco BTA
291See also footnote 3, FTA
292 Articles 17.4.2 and 17.4.3, FTA. These two pro-
visions are not found in CAFTA or the US-
Morocco FTA
293 Article 2.1, FTA, on General Definitions
294See Article 27 of Chile’s Law 18.455, which
"Sets Rules on Production, Elaboration, and
Commercialisation of Ethylic Alcohols, Ethylic
Beverages and Vinegars". Article 27: “The
President of the Republic, by supreme decree
issued through the Ministry of Agriculture, may
establish vine-producing zones and denomina-
tions of origin for wines and spirits in certain areas
of the country, where conditions of weather, soil,
varieties of grapes, cultural and oenological prac-
tices are homogeneous” (non-official translation)
295Footnote 5 to Article 17.4, FTA
296Lanham Act § 2(a) [Title 15 U.S.C. § 1052(a)]
297 Article 17.4.5, FTA
298 Article 17.4.6, FTA
299 Article 17.4.7 and 8, FTA
300 Article 17.4.10, FTA: “After the date of entry into
force of this Agreement, each Party shall ensure
that grounds for refusing protection or registration
of a geographical indication include the following:
(a) the geographical indication is confusingly simi-
lar to a pre-existing pending good faith applicationfor a trademark or a pre-existing trademark regis-
tered in that Party; or (b) the geographical indica-
tion is confusingly similar to a pre-existing trade-
mark, the rights to which have been acquired
through use in good faith in that Party”
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4.1 Introduction
The enforcement of rights and obligations is a key compo-
nent of trade agreements. The existence of a dispute settle-ment mechanism also provides guarantees to the Parties that
the problems that may arise because of the implementation
and enforcement of commitments will be resolved in an
orderly manner. In other words, these mechanisms are estab-
lished to ensure that Parties will be able to fulfil their com-
mitments and to protect their interests more effectively. In
the FTA, as in the WTO system, within the IPRs Chapter
itself there are specific rules on the enforcement of those
rights, and in a separate chapter there is an FTA mechanism
for the settlement of all disputes related to the Agreement.
This part of the study looks at these two important procedur-
al components of the FTA.
4.2 Enforcement, acquisition and
maintenance of rights
4.2.1 General provisions
The enforcement provisions of the FTA follow the same
structure as the TRIPS Agreement. Accordingly, it contains
provisions dealing with General Obligations; Civil and
Administrative Procedures; Provisional Measures; Border
Measures; and Criminal Procedures. For the USA301, proba-
bly the most important achievement in this area was to make
mandatory many of the discretionary remedies includedunder TRIPS. The important novelty of the FTA, as far as
TRIPS and the WIPO Internet Treaties are concerned, is that
it provides for “Limitations on Liability of Internet Service
Providers”.
As discussed elsewhere in this study, the FTA does not
include the so-called “freedom of implementation” clause
found in TRIPS (Article 1.1) that recognizes that Members
“shall be free to determine the appropriate method of
implementing the provisions of this Agreement within
their own legal system and practice”.
Probably, because both countries have very different legal
systems, they incorporated a TRIPS-type provision in theenforcement part of the FTA:
17.11.1: “Each Party shall ensure that procedures and
remedies set forth in this Article for enforcement of intel-
lectual property rights are established in accordance with
its domestic law. Such administrative and judicial proce-
dures and remedies, both civil and criminal, shall be made
available to the holders of such rights in accordance with
the principles of due process that each Party recognizes as
well as with the foundations of its own legal system.”
Though no one could expect to find too many differences
between the principles of due process in Chile and the USA,
there may be some differences in other respects relating to
the different legal systems prevailing in both countries.
TRIPS (Article 41) limits enforcement provisions specifical-
ly to the IPRs covered by the Agreement, while the FTA does
not appear to limit the application of the enforcement provi-
sions to the particular IPRs covered by the FTA. Therefore,
the procedures and remedies established in the FTA should
apply to all IPRs protected by each Party, including for
example plant breeders rights or rights of broadcastingorganizations, which are not dealt with in the FTA. One
could also assume that the same provisions should eventual-
ly apply to prospective related rights such as protection of
non-original databases, or protection for traditional knowl-
edge and folklore.
In the same vein as TRIPS, the FTA provides that there is no
need to create a special enforcement system for IPRs, dis-
tinct from that existent for law enforcement in general. There
is neither an obligation to assign special resources for the
enforcement of IPRs, different from that for the law in gen-
eral, but this shall not excuse a Party from compliance with
the provisions on enforcement of the FTA302, which already by itself constitutes a TRIPS-plus standard.
Other general provisions on enforcement refer to transparen-
cy and writing requirements of final judicial decisions.
Though TRIPS (Article 41.3) provides that decisions on the
merits of a case shall preferably be in writing, the FTA lim-
its this flexibility to final decisions on the merits of a case of
general application.
In case a Party collects information on the efforts that it
makes to improve enforcement, that information must be
publicized or made available to the public. This provision
under the FTA (Article 17.11.4), which is not found inTRIPS, might be considered a useful tool to demonstrate the
effectiveness of the domestic enforcement mechanisms. It
could also have a persuasive role in reducing infringements
and may be a means to demonstrate the efforts made and the
amount of resources being dedicated to the enhancement of
42
301Note that the IFAC-3-Chile, 2003, report states
(p 17) that the agreement makes some “significant
advances” towards deterring further infringements,
and clarifies and builds upon existing TRIPS stan-
dards.
302See last sentence of Article 17.11.2 (b), FTA
4. Enforcement and dispute settlement
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enforcement mechanisms. For the industry this provision
would also permit it to evaluate performance and inform the
public about the importance of IPRs and the risks attendant
upon their infringement.
Though the FTA (Article 17.11.7) suggests that civil judicial
procedures shall be available to right holders for the enforce-
ment of any IPR, it specifically provides for civil remedies in
case of infringement of both the technological protectionmeasures (TPMs) and the rights management information
(RMI) provisions in the copyright section of the FTA. This
specific and special reference to TPMs and RMI is an admis-
sion that they are not strictly IPRs per se, but something that
borders in between IPRs and general property law. Indeed,
when the FTA, as well as the WCT and the WPPT, deal with
TPMs, they refer to measures “used by authors in connection
with the exercise of their rights”. Though TPMs have been
incorporated into copyright and related rights treaties (WIPO
1996 Treaties) and consequently into copyright laws, they
could be dealt with in general property laws. Technically,
TPMs serve a much broader purpose than protecting copy-
right. As was explained above, the same technology that isused to protect works and phonograms is also used to safe-
guard material that does not qualify as copyright, such as
non-original material or once copyrighted works that have
already fallen in the public domain.
Finally, among the general provisions on enforcement there
are two important legal copyright presumptions. The first
one is a presumption of authorship. The Parties agreed that
Article 17.22.6(a): “The natural person or legal entity
whose name is indicated as the author, producer, per-
former, or publisher of the work, performance, or phono-
gram in the usual manner, shall, in the absence of proof to
the contrary, be presumed to be the designated right hold-
er in such work, performance, or phonogram.”
There is no similar provision in the TRIPS Agreement, but
there is one in the Berne Convention303 (incorporated in
TRIPS by default, Article 9.1). But, the FTA goes beyond
TRIPS (Berne) in two aspects. First, it explicitly applies the
presumption of authorship to legal entities (“legal entity
whose name is indicated as the author”), thus narrowing the
gap between Chile’s system of rights of authors ( Derecho de
Autor ) and the US copyright system304. Secondly, the FTA
extends the presumption of authorship in Berne to related
rights holders, a presumption that is not included in the
Rome Convention.
The second copyright presumption is that:
Article 17.11.6(b): “It shall be presumed, in the absence of
proof to the contrary, that the copyright or related right
subsists in such subject matter. A Party may require, as a
condition for according such presumption of subsistence,
that the work appear on its face to be original and that it
bear a publication date not more than 70 years prior to the
date of the alleged infringement”.
This provision shifts the balance of copyright/public domainin the sense that everything should be considered protected
(copyrighted), save for subject matter that evidently has fall-
en into the public domain. In other words, the burden of
proof of demonstrating that a work is protected falls on the
general public that uses original works and not on the sup-
posed author. Thus, under this provision the burden of proof
regarding infringement or lack of infringement is reversed,
falling on the defendant. Pre-FTA, it was presumed that
copyright on original works was exceptional; post-FTA, the
presumption of subsistence of copyright becomes the gener-
al rule. Parties, however, are free to provide that the pre-
sumption will only be valid on two conditions: that the work
appear on its face to be original and that it bear a publicationdate not more than 70 years prior to the date of the alleged
infringement. The 70 years from publication term is the
equivalent to the term of protection granted to legal persons.
4.2.2 Civil and administrative procedures and
remedies
For civil judicial procedures the FTA states that:
Article 17.11.7:“Each Party shall make available to right
holders305 civil judicial procedures concerning the enforce-
ment of any intellectual property right.”
This phrase was practically copied from TRIPS (Article 42),
with some qualifications. While TRIPS provides that civil
procedures will be available for the enforcement of only the
IPRs covered by the Agreement, the FTA does not limit civil
procedures to the rights covered by the Agreement. This
seems to be simply a reiteration of the general principle
examined earlier (Article 17.11.1, FTA), which with respect
to TRIPS also broadens the scope of application of the
enforcement provisions of the FTA to all kinds of IPRs306 . In
any case, in Chile, civil procedures are available for all types
of IP infringements.
The FTA further provides (Article 17.11.8(a)) that damages
should be paid by the infringer to compensate for the injuries
suffered by the right holder, without qualifying the nature of
the infringement. The equivalent provision in the TRIPS
43
303 Article 15.1, Berne: “In order that the author of a
literary or artistic work protected by this
Convention shall, in the absence of proof to the
contrary, be regarded as such, and consequently
be entitled to institute infringement proceedings in
the countries of the Union, it shall be sufficient for his name to appear on the work in the usual man-
ner”
304 Article 15.3, Berne, does apply a presumption of
authorship to legal persons in the case of cine-
matographic works: “The person or body corpo-
rate whose name appears on a cinematographic
work in the usual manner shall, in the absence of
proof to the contrary, be presumed to be themaker of the said work”
305Footnote 29, FTA, states: “the term “right holder”
shall include duly authorized licensees as well as
federation and association having legal standing
and authorization to assert such rights.”
306 According to Chilean negotiators there was an
attempt to make such limitation by adding at theend of the relevant provision the sentence “of any
intellectual property rights recognized by the
Party”, but this proposal failed to be agreed
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Agreement307 limits damages to an infringement of the rights
by an infringer who “knowingly, or with reasonable grounds
to know, engaged in infringing activity”. Therefore, innocent
infringement according to TRIPS may be excluded308; how-
ever, it is not apparent whether that possibility is open in the
FTA.
Also for damages, at least in cases of trademark and copy-
right infringement, the infringer may be ordered to pay to theright holder the profits resulting from the infringement that
were not considered when determining the injury. In charac-
terizing injury, the judicial authorities shall consider, among
others, the legitimate retail value of the infringed goods.
The provisions related to civil procedures imply in some
respects major changes in the Chilean procedural system,
particularly as compared to the obligations in TRIPS. For
example, according to the FTA, the Parties agreed to institute
pre-established damages at least in cases of copyright and
trademark counterfeiting. This is a significant TRIPS-plus
standard in the sense that in the latter this is only an option-
al remedy. In the Chilean system, damages are only supposedto compensate for the losses caused by the injury. So, theo-
retically, damages may never exceed the actual prejudice suf-
fered by the right holder. The obligation of statutory damages
alters drastically the Chilean general system of compensa-
tory damages upon which IPRs had traditionally relied309.
Another major change that will be brought about by the
FTA310 is that in civil judicial proceedings, courts may order
the destruction of the infringing goods, and of materials and
implements used in the manufacture of the infringing goods.
In Chile, this possibility exists only in criminal proceedings;
therefore, the Chilean civil law would have to be amended
accordingly.
These two cases are good examples on how national proce-
dural systems for IPRs enforcement would radically evolve
as a result of the FTA. In the case of pre-established dam-
ages, this will mean the importation of procedural institu-
tions from a common law system into a civil law system. For
the destruction of goods, it translates into the import of insti-
tutions from criminal to civil judicial proceedings.
Besides providing for the destruction of infringing goods,
Parties agreed that in exceptional cases, the charitable dona-
tion of infringing goods without the authorization of the right
holder would be permitted as long as it does
Article 17.11.12(b): “not conflict with the normal
exploitation of the work, performance, or phonogram, and
do(es) not unreasonably prejudice the legitimate interests
of the right holder”.
Other provisions related to judicial civil proceedings refer to
payment of court costs311 and reasonable attorney fees to the
prevailing party; the seizure of infringing goods, materialsand implements; and with the infringer providing informa-
tion312 about other persons involved in the infringement and
the channels of distribution used for infringing.
4.2.3 Provisional measures
The FTA (Article 17.11.15) complements TRIPS (Article
50.2) in the sense that provisional measures inaudita altera
parte (without hearing the other party) must be acted upon
expeditiously in accordance with judicial procedural rules of
each Party.
It seems also that the FTA allows authorities to request evi-
dence from the applicant only when the infringement of theright is imminent, not when it is already being infringed, as
provided in TRIPS (Article 50.3). What the FTA adds to
TRIPS is that reasonable security or equivalent assurance
must be in an amount sufficient, not only to protect the
defendant and to prevent abuses, but also not to unreason-
ably deter recourse to such procedure.
The FTA provides further that the costs of appointing
experts313 must be reasonable or based in standardized fees
and shall not unreasonably deter recourse to provisional
relief. There is no equivalent provision in TRIPS, but it fol-
lows from the general principle that enforcement procedures
should not become unreasonably complicated and costly314
.
4.2.4 Border measures
As far as border measures are concerned, the FTA goes
beyond TRIPS particularly in one aspect. The latter
Agreement provides for border measures, including ex offi-
cio actions, only for the importation of counterfeit trade-
marks or pirated goods. The application of border measures
to goods being exported and to goods in transit315 is optional.
The FTA is TRIPS-plus in the sense that it provides for ex
officio measures for goods being imported, as well as for
those destined for export or moving in transit.
44
307
Article 45.1, TRIPS308This provision may open the discussion of
whether IPR statutes, in particular copyright laws,
are strict liability statutes, where infringement may
occur regardless of whether damage or infringe-
ment is committed wilfully or without knowledge of
the illegal conduct
309 According to Chilean negotiators a previous ver-
sion of this same provision provided that the
statutory damages should be in an amount suffi-
cient enough to deter future infringement and to
compensate the right holder for the harm caused
by the infringement. During the negotiations this
was changed by the establishment of pre-estab-
lishment damages that the judicial authoritiesdeem reasonable in light of the goals of the IP
system and the objectives set forth in the IP
Chapter of the Agreement (Article 17.11.9)
310 Article 17.11.12 (a), FTA
311 According to sources consulted in the prepara-tion of this work this particular matter was largely
discussed because earlier proposals on the mat-
ter provided that the prevailing party in civil judi-
cial proceedings should not be required to pay
court costs. This proposal did not succeed
312Under Article 47, TRIPS, Members may provide
that the judicial authorities shall have the power to
order the infringer to inform the right holder of the
identity of third persons involved in the productionand distribution of the infringing goods and of their
channels of distribution. According to Article
17.11.13, FTA, it is an obligation for the Parties to
provide the judicial authorities with such an
authority. In addition to TRIPS in these cases, the
judicial authorities shall also have the authority to
impose fines or imprisonment on the infringer whodoes not comply with such orders
313The TRIPS Agreement does not contain specific
provisions regarding the appointment of experts
as a provisional measure.
314 Article 41.2, TRIPS
315Footnote 13,TRIPS
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4.2.5 Criminal procedures and remedies
As in TRIPS, the FTAprovides for criminal measures at least
for cases of wilful trademark counterfeiting or copyright
piracy on a commercial scale. But it goes beyond TRIPS in
that it broadens the scope of what is considered a wilful
infringement on a commercial scale for two specific situa-
tions that probably had in mind copyright infringement in the
digital environment.The first relates to the obligation of the Parties to ensure that
Article 17.11.22(a): “…willful infringement of copyright
and related rights for a commercial advantage or financial
gain, is subject to criminal procedures and penalties.”
This provision seems to disregard the quantitative “commer-
cial scale” requirement in TRIPS and replaces it with the
notion of a “commercial advantage or financial gain” ele-
ment, which focus more on the purpose of the infringement,
even if it is not made at a commercial scale.
But this important provision, while being broad enough, is
narrowed down by provisions that clarify that for purposes of criminal procedures,
Footnote 33, Article 17.11.22:“…evidence of reproduc-
tion or distribution of a copyrighted work, by itself, shall
not be sufficient to establish willful infringement
and
Footnote 34: “…commercial advantage or financial gain
shall be understood to exclude de minimis infringements.
This rider seems to limit judicial action with respect to the
transmission and exchange of files in computer networks
(peer to peer technology), implying that it is not bad in itself
and there are legitimate uses for such technology, such as the
exchange of uncopyrighted files. Therefore, the claimant will
still have to prove that the infringement was wilful and done
for a commercial advantage or financial gain.
A further clarification acknowledges316 that
Article 17.11.22(a)(ii): “…copyright or related rights pira-
cy on a commercial scale includes the willful infringing
reproduction or distribution, including by electronic
means, of copies with a significant aggregate monetary
value, calculated based on the legitimate retail value of
the infringed goods;”
This also seems to be tackling the problem of infringements
in the digital environment, particularly the distribution or exchange files in the Internet. The words “copies with sig-
nificant aggregate monetary value” refers mainly to comput-
er software, not to text, music or video files.
Other provisions of the FTA with respect to criminal proce-
dures provide for detailed rules on seizure, forfeiture and
destruction of infringing goods and elements used in the
infringements. Finally, the FTA provides that appropriate
authorities in cases of copyright piracy and trademark coun-
terfeiting, could exercise legal action ex officio without the
need for a formal complaint.
4.2.6 Limitations on liability for Internet Service
Providers317
The FTA provides for detailed rules on the limitation of
responsibility for Internet Service Providers (ISPs). These
provisions are based in the US Copyright Act318. This issue
was extensively discussed during the negotiations, mainly
because of its novelty in IP negotiations. Initially it was to be
incorporated in the FTA as a side letter, but finally it was
included in the IP Chapter itself. No such provisions can be
found in NAFTA or in the trade agreement signed with
Jordan. The treaty with Morocco, besides having very simi-
lar provisions, has also a side letter about the notification
system to be established.
The FTAprovides specific rules on liability of and limitation
of the liability of services providers for infringing content
that is transmitted or stored in their networks when they per-
form certain functions, such as hosting, caching or linking.
This kind of provision is also included in the US agreements
with Australia319, Singapore320, and CAFTA321.
The relevant provisions of the FTA provide ISPs with safe
harbours from cases of secondary liability for copyright
infringement that takes place within their networks.
Basically, ISPs could be considered liable for copies of copy-
righted works that are stored or that transit through their net-works, but that are not initiated, directed or controlled by
them. The system of limitation of liability allows them to be
exempted from monetary liability if they block access or take
down infringing content as soon as they have knowledge of
the supposed infringement, including through appropriate
notifications from the right holders. The FTAleaves room for
the Parties to devise the system through which notifications
will be made.
There has been much criticism in the USA to the provisions
on liability of ISPs, mainly because the DMCA would affect
privacy right of users of the Internet. Specifically, the
DMCA allows for right holders to request the clerk of anyUS district court to issue a subpoena to a service provider for
identification of an alleged infringer. The FTA was careful
enough to provide that Parties will
45
316This clarification seems to expand the concept
of “piracy” from reproduction to include also distri-
bution
317 Article 17.12.23, FTA
318Title 17, Section 512, the Online Copyright
Infringement Liability Limitation Act was incorpo-
rated into the Copyright Act as part of the Digital
Millennium Copyright Act (DMCA), inter alia, to
make US law compliant with the WIPO 1996
Treaties
319 Article 17.11.29, US-Australia FTA
320 Article 16.9.22, US-Singapore FTA
321 Article 15.11.27, CAFTA
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Article 17.11.23 (h): “…establish an administrative or
judicial procedure enabling copyright owners who have
given effective notification of claimed infringement to
obtain expeditiously from a service provider information
in its possession identifying the alleged infringer.”
Thus, Parties will have to decide whether they implement
this provision through a judicial procedure, as should be the
case, or a quasi-judicial procedure as provided for in theDMCA.
4.3 The FTA dispute settlement mechanism
4.3.1 General considerations
The Dispute Settlement Understanding (DSU) negotiated
during the Uruguay Round was a major accomplishment of
the multilateral trading system and represented a fundamen-
tal change from the mechanism established under GATT
1947. In the WTO system the dispute settlement mechanism
is based on the principle that any Member can challenge
trade measures taken by any other Member, so that even
those countries that are economically weak can challenge the
more economically powerful trade partners322. However, the
practical application of this important principle is not neces-
sarily straightforward. For example, a challenge by a country
with a limited domestic market might not make a significant
impression on a major trading partner, as was the case of
Ecuador in 2000 threatening retaliation in the IP field in
response to the European bananas regime323.
The same basic principle guides the FTA dispute settlement
mechanism.
The need for dispute settlement arises whenever a Party to a
trade agreement considers that benefits accruing to it under their commitments are being impaired through measures
taken by the other Party. Since the Agreement is based on the
idea of reciprocal and mutually advantageous economic ben-
efits through trade liberalization, it is the principal objective
of a dispute settlement to reinstall, as quickly as possible, a
situation in which each Party can fully enjoy the benefits it is
entitled to under the free trade agreement. For the realization
of this objective, in the case of the WTO-DSU mechanism a
very detailed and rules-based procedure is established, con-
sisting of several different phases, each of which is subject to
mandatory time frames324.
The main features of the WTO system are present in the FTAwith some particular characteristics discussed in this section
of the study.
The USA has long advocated greater transparency in the
WTO dispute-settlement system. According to that perspec-
tive, experience shows that the Dispute Settlement Body rec-
ommendations and rulings can affect large segments of civil
society. At the same time, increased membership in the WTO
has also meant that more governments and their citizens have
an interest in those recommendations and rulings. Yet civil
society and non-party Members have been unable even to
observe the arguments or proceedings resulting in those rec-
ommendations and rulings.
In the FTAA negotiations, the proposals by the USA on dis-
pute settlement pursue these similar objectives. In that
forum, the overall goal of the dispute settlement proposal is
to establish a mechanism to be perceived as fair, transparent
and effective that would apply to disputes between govern-
ments about the interpretation or application of the agree-
ment. The US proposal does not address any special rules
that might be needed about disputes in particular areas; any
such special rules would be developed as the negotiations
proceed. Accordingly, disputes arising under both the FTAA
and the WTO generally may be settled in either forum at the
discretion of the complaining Party. This general rule is sub- ject to an exception intended to minimize multiple litigation.
Once an FTAA Party would have chosen a forum, the pro-
posal would exclude recourse by that Party to any other
forum.
4.3.2 The main features of the FTA mechanism
The US demands, as briefly reviewed above, for greater
transparency in the dispute settlement mechanism seem to be
reflected in the FTA mechanism. The dispute settlement
mechanism applies to almost all the different matters cov-
ered by the Agreement, except for some provisions related to
Competition Policy, Designated Monopolies, and State
Enterprises (Chapter 16)325. In addition, some special pro-
ceedings are included for financial services326, environment327
and labour 328 issues, where technical consultations are estab-
lished.
The agreed mechanism includes an alternative remedy to
retaliation in certain disputes when a Party does not comply
with the recommendation provided for in the panel report,
which permits the respondent to pay an annual monetary
assessment. Both Parties shall determine the amount or, if
no agreement is reached, it should be equivalent to 50% of
the level of the benefits the panel has determined to be of
equivalent effect, or 50% of the level that the complaining
Party has proposed to suspend. If the respondent fails to pay
the monetary assessment, the other Party may suspend the
application of benefits in accordance with the provisions of
the FTA.
46
322Lacarte, 2000
323Bronkers, 2004
324See UNCTAD-ICTSD Resource Book,
Chapter 5.3
325 Article 16.8, FTA
326 Article 12.17, FTA
327 Article 19.5, FTA
328 Article 18.6, FTA
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The FTA, as in the case of the proposal in the FTTA, allows
Parties to choose the forum in which a dispute should be set-
tled when a matter arises under the Agreement and under
another trade agreement (i.e., the WTO) to which Chile and
the USA are parties. The complaining Party has the right tochoose the forum. In that case, the selected forum shall be
used to the exclusion of the others.
The mechanism includes basically consultations, good
offices, conciliation and mediation, and the establishment of
an Arbitration Panel. For the latter, the Agreement obliges
the Parties to establish and maintain, within six months after
the entry into force of the FTA, a roster of at least 20 indi-
viduals who are willing and able to serve as panellists in the
various disputes that could arise, appointed by mutual agree-
ment of the Parties. Six of these members shall be non-Party
nationals. The roster remains in effect for a minimum of
three years and panellists may be reappointed. Box 14 pro-vides an overview of the different steps provided for in the
FTA for the settlement of a particular dispute.
Finally, the dispute settlement mechanism applies, unless
otherwise provided for in the Agreement:
• to the avoidance or settlement of all disputes between
the Parties regarding the interpretation or application of
the Agreement;
• whenever a Party considers that a measure adopted by
the other Party is inconsistent with the obligations con-
tained in the FTA or the Party has failed to carry out its
obligations; and,
• whenever a Party considers that a measure of the other
Party causes nullification or impairment.
4.3.3 Non-violation complaints
As noted above, the FTA mechanism includes non-violation
complaints as a component of the dispute settlement mecha-
nism. In the WTO system330, the difference between violation
and non-violation remedies is that, under violation com-
plaints, the competitive relationship is upset through the vio-
lation by one Member of a WTO obligation, whereas under
non-violation complaints, this competitive relationship is
upset through “WTO-consistent” action on the part of one
Member, rendering the results of certain market access con-
cessions made by that Member less beneficial for other
47
329The “Free Trade Commission” comprises cabi-
net-level representatives of the Parties or their
designees, and, among other functions, supervis-
es and oversees the enforcement of the FTA
330See UNCTAD-ICTSD Resource Book , Chapter
5.3
Box 14: Different steps in the settlement of a dispute
As in the WTO dispute settlement mechanism, the first step is
consultations between the Parties on any actual or proposed
measure to be taken by one of them. Identification of the meas-
ure and indication of the legal grounds for the complaint shall be
included in the request for consultations.
The main commitment of the Parties at this stage is to attempt to
reach a mutually satisfactory solution of the matter subject to the
consultations. If consultations fail, a Party may request a meeting
of the Free Trade Commission329 that has to meet within the time
frames provided for in the FTA (Article 22.5.1). In such case the
Commission may, alternatively, besides assisting Parties to reach
a mutually satisfactory solution to the dispute, do the following:
• call on technical advisers;
• create a working group;
• create an expert group;
• have recourse to good offices, conciliation or mediation; or
• make recommendations.
If the Parties fail to resolve the dispute within the time frames set
out in the FTA either Party may request the establishment of an
arbitration panel to consider the matter. The request shall state
the measure complained about and the provisions of the
Agreement relevant to the dispute. An arbitration Panel is com-posed of three Members. The rules of procedure shall be estab-
lished and modified by the Commission, and could be comple-
mented by additional procedural rules adopted by the Panel, not
inconsistent with the former. As in the WTO Understanding on
Rules and Procedures Governing the Settlement of Disputes
(Article 7), panels in the FTA have also standard terms of refer-
ences.
Upon request of a Party or unless the Parties disapprove, the
Panel is entitled to seek information and technical advice on tech-
nical matters raised by a Party, including environmental, labour,
health and safety matters, from any other person or body that it
deems appropriate. This rule seems to be different from the DSU
of the WTO.
The Panel report of the Arbitration Panel shall be based on the
relevant provisions of the FTA and the submissions and argu-
ments of the Parties. If the Parties agree, the Panel may also
make recommendation to resolve the dispute.
The Parties shall agree on the resolution of the dispute. If the
Panel determines that a Party has not conformed to its obliga-
tions or it is causing nullification or impairment, the resolution
shall be to eliminate the non-conformity or the nullification or
impairment. The Parties may agree on a mutually satisfactory
action plan to resolve the dispute that normally shall conform to
the determination and recommendation of the Panel.
If the Parties are unable to agree on compensations, the com-
plaining Party may notify that it intends to suspend the application
of benefits of equivalent effect. If the Party complained against
considers that the level of benefits to be suspended is manifestly
excessive or it has eliminated the non-conformity or the nullifica-
tion or impairment that the Panel found, it may request that the
Panel be reconvened to consider the matter. If the Panel deter-mines that the level of benefits proposed to be suspended is
excessive, it shall determine the level of benefits to be consid-
ered of equivalent effect.
Unless the Commission otherwise decides, a monetary assess-
ment shall be paid to the complaining Party in equal, quarterly
instalments, which shall be paid into a fund established by the
Commission for appropriate initiatives to facilitate trade between
the Parties.
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Members. It is considered a valid cause of action if one
Member by some purely domestic measure frustrates the
legitimate expectations of other Members as to the competi-
tive advantages their products can draw from a negotiated
tariff concession. However, such legitimate expectations
may not be invoked if the complainant could “anticipate,” at
the time of negotiating the concession, the possible adoption
of future domestic measures by the respondent that would
cancel out the complainant’s competitive advantage resulting
from the negotiated concession. This requirement ensures
that non-violation complaints are actually used in case of the
frustration of legitimate expectations and not merely on
grounds of a negative economic development. This distinc-
tion and rationale for non-violation complaints extend to the
case of the FTA.
In the FTA, there are no specific rules in the IPRs Chapter on
this matter; therefore, non-violation situations could be the
source of differences between the parties and give rise to a
dispute. However, the automatic application of non-violation
complaints to IPRs is not obvious. In TRIPS, it was recog-
nized that this was a subject deserving further considerationand transitional arrangements were devised to that effect. In
the Council for TRIPS this continues to be an outstanding
question. A recent publication argues that:
“Bilateral agreements such as the recently concluded US-
Chile, Central American Free Trade Agreement (CAFTA),
and US-Australia, for instance, irrevocably place intellec-
tual property within the scope of non-violation com-
plaints. …The effects of these complaints in relation to
the rights of Parties to regulate intellectual property in the
public interest could be significant. In addition, bilateralagreements eliminate particular elements of dispute set-
tlement rules as they apply to non-violation, another issue
the US has long advocated. The loss of these characteris-
tics, designed to protect countries from challenges based
on an inherently ambivalent claim, may prejudice devel-
oping countries with scarce resources to respond to an
increasing number of vague claims, as well as make them
more vulnerable to pressure to refrain from using flexibil-
ities offered by intellectual property standards.” 331
In brief, for non-violation complaints, the FTA clearly
includes them in the dispute settlement mechanism and thus
IPRs disputes could be based on measures by one Party con-
sidered by the other to cause nullification or impairment of
the former expectations.
48
331South Centre/CIEL, 2004. The report acknowl-
edges that: “Nonetheless, these bilateral agree-
ments establish some limitations for non-violation
complaints that must be taken into account. In theUS-Chile FTA, for instance, benefits expected
under the intellectual property chapter cannot be
invoked with respect to measures taken under
the general exception provisions. That is, meas-
ures taken under Article XX of GATT 1994 (incor-porated, along with its interpretive notes, into the
agreements mutatis mutandis), cannot be chal-
lenged on the basis of nullification or impairment
of benefits expected under the intellectual proper-
ty provisions.”
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The TRIPS Agreement signalled a major change in interna-
tional economic relations. For the first time IP entered in full
into the international trading regime332. This, in a way,
reflected the approach of the USA that since the Trade Act of 1974 established in its commercial relations a link between
trade and adequate protection of IP. The reasons for includ-
ing IPRs in the framework of the multilateral trading system
during the Uruguay Round of Multilateral Trade
Negotiations that concluded with the creation of the WTO
are complex. The attempt was originally resisted by a num-
ber of developing countries. Countries expressed concerns,
among others, on social interests grounds, about subjecting,
for example, inventions related to public health and nutrition
to strict patenting rules under a new trading regime333.
While TRIPS introduces minimum standards of protection,
albeit with some flexibilities, recent trends suggest a morecomplex picture characterized as a TRIPS-plus phenomenon.
It has elicited concerns as it goes beyond the minimum stan-
dards of TRIPS by seeking to harmonize IP regimes with
those of economically and technologically more advanced
countries. This harmonization trend is being encouraged in
bilateral, regional and new multilateral initiatives334. The
concerns advanced by some developing countries relate to
the curtailment of their policy space in an important area of
economic development. In brief, the perception by many is
that TRIPS-plus requirements will inhibit countries from
using fully the flexibilities implicit in the TRIPS
Agreement335 and to resort to industrial policies with laxer
systems of IPRs protection, which were followed in the past
by developed countries and until recently by newly industri-
alized countries336.
The TRIPS-plus phenomenon responds to the view that the
Agreement is considered as not adequately reflecting the
highest standards of IP protection needed to promote global
trade and to respond to the requirements of the digital age. As
a result, in recent years, the USA has followed a clear and
explicit bilateral trade policy going beyond the TRIPS
Agreement by including TRIPS-plus provisions in its free
trade agreements post-NAFTA, which was, by the way, con-
cluded almost in parallel with the Uruguay Round
Negotiations. This bilateral agenda has included most issues
raised by the USA in various international fora, namely:
• the extension of copyright, trademark, and patents pro-
tection;• the need to ratify certain IP-related treaties;
• patent protection for life forms;
• limitations in granting compulsory licences on patents;
• specific implementation of TRIPS provisions in areas
such as undisclosed information;
• rules concerning the exhaustion of IPRs.
The closer study of the FTA is a stimulating incursion into
this TRIPS-plus world. At this stage, it is difficult to assess
the overall impact of the IP provisions of the FTA and even
more to extrapolate results of such evaluation to other coun-
tries. The FTA is a comprehensive treaty, which in Chile’s
perception, together with a broad network of trade agree-
ments with a multifarious group of trade partners, constitutes
a dynamic feature of its economic policy geared at the pro-
motion of exports of services and products with greater
added value. Thus, the impact of this Agreement cannot be
assessed in isolation of other considerations.
One tentative conclusion that one can derive from the FTAis
that the level of its IPRs protection and enforcement provi-
sions337 are less stringent than those negotiated by the USA –
simultaneously with Singapore and subsequently with
CAFTA, Australia, Bahrain and Morocco338; however, it
includes a number of key provisions that might constitute
precedents for incorporation in future bilateral and multilat-
eral agreements.
The provisions of the FTA dealing with pharmaceutical prod-
ucts, as well as those negotiated in the context of other US
bilateral trade agreements have elicited a number of criti-
cisms. In the FTA, the expanded protection of pharmaceuti-
cal products is, in some respects, conditioned to the princi-
ples set out in the Declaration on the TRIPS Agreement and
Public Health that is specifically highlighted in the Preamble
to Chapter 17 of the FTA. The Preamble is unique compared
to the bilateral trade agreements signed by the USA. As
noted in this study, the relation between, on one side, the
Preamble and the general principles of the Agreement – such
49
332Previous to the TRIPS Agreement, there werereferences to IPRs in the GATT-1947. For
instance, Article IX deals with Marks of Origin;
both Article XII on Restrictions to Safeguard
Balance of Payments and Article XVIII on
Governmental Assistance to Economic
Development state that Parties may not apply
restrictions which would prevent compliance with
patent, trade mark, copyright, or similar proce-
dures. Finally, Article XX, which provides for gen-eral exceptions, allows for exceptions necessary
to secure compliance with laws or regulations
which are not inconsistent with the provisions of
this Agreement, including those relating to the pro-
tection of patents, trade marks and copyrights,
and the prevention of deceptive practices.
333 Abbott, 2002
334Vivas-Eugui, 2003
335Commission on IPRs, 2002; UNCTAD-ICTSD,
Policy Discussion Paper ; Drahos, 2002
336Kim, 2003
337This fact is clearly highlighted in IFAC-3-Chile,
2003
338 At the time of writing, the US free trade agree-
ments with CAFTA, Australia, Bahrain and
Morocco are still in the process of ratification.
5. Final remarks
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as the non-derogation clause – and on the other, the provi-
sions dealing with pharmaceutical products are, at least,
ambiguous. This ambiguity permeates the entire Chapter 17.
Among the areas not covered by this Chapter, unlike the pro-
posed FTAA, is the granting of compulsory licences to allow
for the use of the subject matter of a patent. In this area, as
well as in others not covered by the Agreement, the latter
does not innovate. However, Abbott concludes that in somecases, in particular the agreements of the USA with CAFTA
and Morocco,
“…the provisions relating to patents and regulatory
approvals with respect to medicines … are intended to
restrict the flexibilities inherent in the TRIPS Agreement,
Doha Declaration and Decision on Implementation of
Paragraph 6… They appear designed to negate the effec-
tive use of compulsory licensing by blocking the market-
ing of third party medicines during the term of patents.”339
The FTA, as reiterated in this study, does not address the
whole gamut of IPRs issues. For example, in an area wherea number of developing countries have claimed that interna-
tional IP regimes fail to account adequately for traditional
knowledge, the FTA does not provide guidelines and does
not innovate with respect to current debates in the Council
for TRIPS and WIPO.
The FTA does not address either the issue of the exhaustion
of IPRs in areas such as patents and trademarks. In this
respect, the Doha Declaration on the TRIPS Agreement and
Public Health of 14 November 2001 reaffirmed the right of
WTO members to use, to the full, the provisions in the
TRIPS Agreement, which provide flexibility by leaving each
member free to establish its own exhaustion regime. The USFTA with Australia, however, allows for the possibility that
in the case of patents, the patent owner may contractually
restrict the importation of patented products that it has placed
on the market. The FTA leaves Parties with the full flexibili-
ty contemplated in TRIPS.
Thus, there are some differences between the FTA and the
other free trade agreements recently signed by the USA.
Although they follow the same structure and have many sim-
ilarities, there are, as described in this paper, some substan-
tive nuances among them.
Finally, as underlined in this study, the recent bilateral agree-ments promoted by the USA add an unchartered page in the
history of IPRs. TRIPS has been one important event in this
history but not the concluding one. This study has attempted
to contribute to the understanding of this trend.
50
339 Abbott, 2004
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ACPA Anti-cybersquatting Consumer Protection Act
APEC Asia-Pacific Economic Cooperation
BTAs Bilateral Trade Agreements
CAFTA Central America Free Trade Agreement
CTEA Copyright Term Extension Act
DMCA Digital Millennium Copyright Act
DSU Dispute Settlement Understanding, WTO
EC European Commission
ECLAC Economic Commission for Latin America and
the Caribbean
EFTA European Free Trade Association
EU European Union
FDA Food and Drug Administration
FTA Free Trade Agreement between Chile and the
United States
FTAA Free Trade Area of the Americas
GATT General Agreement on Tariffs and Trade
GIs Geographical Indications
GNP Gross National Product
GSP Generalized System of Preferences
IANA Internet Assigned Numbers Authority
ICANN Internet Corporation for Assigned Names and
Numbers
ICTSD International Centre for Trade and Sustainable
Development
IFAC Industry Functional Advisory Committee
IP Intellectual property
IPRs Intellectual property rights
ISPs Internet Service Providers
MFN Most-favoured nation
NAFTA North America Free Trade Agreement
NICs Network Information Centres
QIAP Quaker International Affairs Office
QUNO Quaker United Nations Office
PLT Patent Law Treaty
RMI Rights Management Information
SACU Southern African Customs Union
TPA Trade Promotion Authority
TLD Top Level Domain
TPMs Technological protection measures
TRIPS Agreement on Trade-Related Aspects of
Intellectual Property Rights
UDRP Uniform Domain-Name Dispute-Resolution
Policy
UNCTAD United Nations Conference on Trade and
Development
US United States
USA United States of America
USC United States Code
UPOV International Union for the Protection of New
Varieties of Plants
VCLT Vienna Convention on the Law of Treaties
WCT WIPO Copyright Treaty
WIPO World Intellectual Property Organization
WPPT WIPO Performances and Phonograms Treaty
WTO World Trade Organization
51
Acronyms
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Bercovitz, Alberto, “Propiedad Intelectual en el GATT”, Editorial
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Bronkers, Marco and Naboth Van Den Broek , “An Alternative
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Monde Diplomatique, March 2004. An English translation is
available on the QIAP web site: www.qiap.ca
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Ohio, forthcoming, 2004
Drahos, Peter, with Braithwaite, John Information Feudalism.
Who Owns the Knowledge Economy?, Earthscan, London, 2002
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Chile, at: http://www.direcon.clDMCA: Digital Millennium Copyright Act, US Copyright
Office’s Executive Summary of the Section 104 Report, at
http://www.copyright.gov/reports/studies/dmca/dmca_execu-
tive.html
Electronic Frontier Foundation, Unintended Consequences:
Five Years under the DMCA, http://www.eff.org/IP/DMCA/unin-
tended_consequences.php
Escudero, Sergio, International Protection of Geographical
Indications and Developing Countries, South Centre, Geneva,
2001
http://www.southcentre.org/publications/geoindication/toc.htm
European Community and Australia: Agreement on trade in
wine, http://www.ecdel.org.au/eu_and_australia/wineagree-ment/wineagreement.htm
Gervais, Daniel, The TRIPS Agreement. Drafting history and
analysis, Sweet & Maxwell, London, 1998
FTAA, IPRs Chapter, http://www.ftaa-
alca.org/FTAADraft03/ChapterXX_e.asp
ICANN, www.icann.org and White Paper at
http://www.icann.org/general/white-paper-05jun98.htm
IFAC-3-Chile: Advisory Committee Report to the President, the
Congress and the United States Trade Representative on the
U.S.-Chile Free Trade Agreement , Prepared By the Industry
Functional Advisory Committee on Intellectual Property Rights
for Trade Policy Matters (IFAC-3), 28 February 2003,
http://www.ustr.gov/new/fta/Chile/ac-ifac3.pdf IFAC-3-CAFTA: Advisory Committee Report to the President,
the Congress and the United States Trade Representative on the
U.S.-Central America Free Trade Agreement , Prepared By the
Industry Functional Advisory Committee on Intellectual Property
Rights for Trade Policy Matters (IFAC-3), 12 March 2004,
http://www.ustr.gov/new/fta/Cafta/advisor/ifac03.pdf
Industrial Property Department of the Ministry of Economy,
Chile, online data, at: http://www.dpi.cl/shnoti.asp
Kim, Linsu, Technology Transfer and Intellectual Property
Rights: Lessons from Korea’s Experience, UNCTAD-ICTSD
Series, 2003, http://ictsd.org/iprsonline/unctadictsd/pro-
jectoutouts.htm
Lacarte-Muro, Julio and Gappah, Petina, “Developing
Countries and the WTO Legal and Dispute Settlement System: A
View from the Bench”, Journal of International Economic Law,
Oxford University Press, 2000
Lemley, M, Menell, P S, Merges, R and Samuelson, P,
“Software and Internet Law”, Aspen Law & Business, 2000.
Lessig, Lawrence. Free Culture. How Big Media Uses technolo-
gy and the Law to Lock Down Culture and Control Creativity,
The Penguin Press, New York, 2004, http://www.free-
culture.cc/freecontent/
Merges R, Menell, P S and Lemley, M, “Intellectual Property in
the New Technological Age”, Aspen Law and Business, 2000
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2003
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The current industrial property law of Chile was enacted on
25 January 1991 while the copyright law was enacted on 2
October 1970 but has been amended several times since
then. These two statutes cover the most important areas of intellectual property rights, mainly patents (including “utili-
ty models”), trademarks, industrial designs, copyrights and
related rights. Other categories of intellectual property rights
(such as undisclosed information, plant varieties, geographi-
cal indications, etc.), are regulated under a number of differ-
ent pieces of legislation340. A draft law to adapt the Chilean
industrial property law to the TRIPS Agreement and to bilat-
eral agreements signed in recent years, is under considera-
tion in Congress and expected to be approved in 2004.
The Department of Industrial Property of the Ministry of
Economy is in charge of granting patents (including utility
models), trademarks and industrial designs, while the
Archives and Museums Directorate of the National Library
is in charge of the deposit of works subject to the protection
of copyright and related rights. The Seeds Department of the
Agriculture and Cattle Service grants protection for new
plant varieties.
Chile is a Member of a number of international intellectual
property agreements concluded under the auspices of WIPO,
as shown in Table 1.
The industrial property law of 1991 was an important devel-
opment given the prevailing standards in Latin America.
During the legislative discussions of the draft law there was
a lively and controversial debate on the merits of the
patentability of pharmaceutical products, which were until
that time not subject to patent protection according to the law
of 1931, as was the pre-TRIPS practice in all Latin America
and other countries. While domestic manufacturers of phar-maceutical products wanted to delay, for at least ten years,
the patentability of those products, the international
research-based industry pressed hard to have “pipeline pro-
tection”. Finally the law provided for an “in actum”
(prospective, non-retroactive) protection for all unpatented
products. The importance of this outcome was that Chile
broke the international tendency until the late 1980s where
the granting of patents to pharmaceutical products was not
automatic, as even recognized in the transitional provisions
of the TRIPS Agreement.
Although the number of patent applications has grown con-
siderably in Chile since 1991 (by over 200%), the totalamount remains not very significant in comparison to devel-
oped countries or even other Latin American countries342. In
addition, even though the number of domestic patent appli-
cations has increased by 100% since 1991, this represents
only about 11% of the total number of applications submit-
ted every year 343. Table 2 provides a broad picture of the
number of patent applications and those granted in Chile
since the new law was enacted.
A large number of patent applications and patents granted
belong to foreign applicants Nowadays, almost 90% of
patent applications and 87% of patents granted in Chile
belong to that category, as shown in Table 2.
54
340See the notification made by Chile to the TRIPS
Council under Article 63.2, TRIPS on its main IP
laws and regulations (Annex I) and other laws and
regulations (Annex II), WTO document
IP/N/1/CHL/1. The document is available athttp://docsonline.wto.org/GEN_searchResult.asp.
Some of the laws and regulations referred to in
the document are available in the WIPO
Collection of Laws for Electronic Access, CLEA,
at:
http://clea.wipo.int/clea/lpext.dll?f=templates&fn=m
ain-h.htm&2.0
341 As provided under the Spanish patent law of
1981
342In 2001, for instance, Colombia received 44,945
patents applications, while Brazil 94,007 and
Ecuador 28,909. See WIPO statistics available at:
http://www.wipo.int/ipstats/en/index.html
343The relative importance of domestic applicationshas greatly decreased since 1991, when 21% of
the total number of applications corresponded to
domestic patent applications
Annex A: The Chilean Intellectual Property System
Table. 1 Intellectual property treaties to which Chile is a Party
Source: Information obtained from the WIPO online data, available at: http//:www.wipo.int/treaties/
Agreement, convention or treaty to which Chile is a Party Date on which Chile became party
Berne Convention for the Protection of Literary and Artistic Works (Paris Act) June 5, 1970 (July 10, 1975)
Convention Establishing the World Intellectual Property Organization (WIPO) June 25, 1975
WIPO Copyright Treaty (WCT) March 6, 2002
WIPO Performances and Phonograms Treaty (WPPT) May 20, 2002
International Convention for the Protection of New Varieties of Plants, UPOV (1978 Act) January 5, 1996
Paris Convention for the Protection of Industrial Property (Stockholm Act) June 14, 1991
Rome Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations September 5, 1974
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55
344See Industrial Property Department of the
Ministry of Economy, Chile, online data, at:
http//:www.dpi.cl/shnoti.asp?
345Idem
346 About one third of the total number of applica-
tions represents renewal and two thirds represent
new trademark applications. Almost 70%, out of
the total number of trademark applications, corre-
sponds to domestic applicants
347See WIPO statistics available at:
http://www.wipo.int/ipstats/en/index.html
Table. 2 Chile: Number of patent applications and patents granted
Number of applications Number of patents granted
Year Foreign Domestic Total Foreign Domestic Total
1991 870 240 1,110 779 122 901
1992 1,104 329 1,433 948 175 1,123
1993 1,341 341 1,682 1,179 155 1,334
1994 1,591 415 2,006 1,411 219 1,630
1995 1,759 322 2,081 1,532 170 1,702
1996 2,023 360 2,383 1,768 175 1,943
1997 2,647 273 2,920 2,409 161 2,570
1998 2,884 313 3,197 2,570 207 2,777
1999 2,855 347 3,202 2,609 205 2,814
2000 3,236 415 3,651 2,857 243 3,100
2001 2,788 413 3,201 2,504 246 2,750
2002 2,460 547 3,007 2,147 391 2,538
2003 2,281 506 2,787 2,077 329 2,406
Source: Industrial Property Department of the Ministry of Economy, Chile, online data, available at: http//:www.dpi.cl/shnoti.asp?
There is a high degree of concentration in patent applica-
tions, with only four countries accounting for 65% of allapplications submitted between 1991 and 2003 (Germany
9.7%, Netherlands 6%, Switzerland 6.5% and the US
42.4%)344.
Not more than 100 applications for utility models and 300
applications for industrial designs are received by the
Industrial Property Department every year. While figures for
utility models have increased by five times since 1991, those
corresponding to industrial designs have increased about
80% but in this latter case the domestic participation has
dropped from 94% to 66%345.
On trademarks the situation is quite different. More than
30,000 trademarks applications, including new applicationsas well as renewals346, are submitted every year to the
Industrial Property Department. This figure puts Chile
among the 15 top countries receiving trademark applications
per year, even more than some developed countries such as
Denmark (11,997 applications in 2001), Finland (10,224
applications in 2001), Italy (11,005 applications in 2001),
Norway (15,083 applications in 2001) or Sweden (15,155
applications in 2001)347. The total number of trademark appli-
cations by year is shown in Figure 1.
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
applications
registrations
Figure 1. Chile: Number of trademark applications and registrations
Source: Industrial Property Department of the Ministry of Economy, Chile, online data, available at: http//:www.dpi.cl/shnoti.asp?
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56
Annex B: Intellectual Property Treaties to which
Chile is Party or shall become a Party due to recent
free trade agreements
TREATY/AGREEMENT EU EFTA US EU(1) EFTA(1) US(1)
to be applied/acceded
TRIPS Agreement A A B(1) 01.01.2009
Berne Convention A A
Paris Convention A A
Geneva Convention B(1) C 01.01.2009
Rome Convention A A
UPOV 1978 A* B(1)* 01.01.2007UPOV 1991 A* B(1)* 01.01.2007 01.01.2009
Patent Cooperation Treaty B(1) B(1) B(1) 01.01.2007 01.01.2007 01.01.2007
Brussels Convention B(1) 01.01.2009
Madrid Protocol C C C
Madrid Agreement C
Budapest Agreement B(1) B(1) 01.01.2009 01.01.2009
Trade Mark Law Treaty B(1) B(1) 01.01.2009 01.01.2009
WCT B(1) B(1) 01.01.2007 01.01.2007
WPPT B(1) B(1) 01.01.2007 01.01.2007
The Hague Convention C C
PLT C
Nice Agreement B(1) B(1) 01.01.2007 01.01.2007
Strasbourg Agreement B(1) 01.01.2007
Locarno Agreement B(1) 01.01.2009
Vienna Agreement C
Joint Recommendation on well known marks C
A Reaffirm their obligations under these treaties
B Ratification or accession
C Best endeavour to become a Party of that
treaty.
* One or the other treaty
(1) A time frame to become Party to that treaty
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Issues Papers:
3. Multilateral agreements and a TRIPS-plus world: The World
Intellectual Property organisation (WIPO)
Sisule F Musungu and Graham Dutfield, December 2003
2. Special and Differential Treatment of Developing Countries
in TRIPS
Constantine Michalopoulos, October 20031. Regional and bilateral agreements and a TRIPS-plus world:
The Free Trade Area of the Americas (FTAA )
David Vivas-Eugui, July 2003
Discussion Papers:
Food Security, Biotechnology and Intellectual Property:
Unpacking some issues around TRIPS
Geoff Tansey, July 2002
Sui Generis Systems for Plant Variety Protection: Options under
TRIPS
Biswajit Dhar, April 2002
Traditional Knowledge and Intellectual Property: Issues and options surrounding the protection of traditional knowledg e
Carlos Correa. November 2001
Trade, Intellectual Property, Food and Biodiversity: Key issues
and options for the 1999 review of Article 27.3(b) of the TRIPS
Agreement
Geoff Tansey, February 1999
Occasional Papers:
15. Harmonisation or Differentiation in Intellectual Property
Protection? The Lessons of History
Graham Dutfield and Uma Suthersanen, August 2004
14. The Doha Declaration on the TRIPS Agreement and Public
Health and the Contradictory Trend in Bilateral and Regional Free Trade Agreements
Frederick M Abbott, April 2004
13. Trade Diplomacy, the Rule of Law and the Problem of
Asymmetric Risks in TRIPS
Frederick M Abbott, September 2003
12. Establising a Disclosure of Origin Obligation in the TRIPS
Agreement
Carlos M Correa
11. Non-Violation Nullification or Impairment Causes of Action
under the TRIPS Agreement and the Fifth Ministerial Conference: A Warning and Reminder
Frederick M. Abbott
10: Negotiating intellectual property: Mandates and options in
the Doha Work Programme
Jonathan Hepburn, November 2002
9: Compulsory Licensing for Public Health Needs: The TRIPS
Agenda at the WTO after the Doha Declaration on Public Health
Frederick Abbott, February 2002
8: Geographical Indications and TRIPS
Michael Blakeney, November 2001
7: The TRIPS Agreement, Access to Medicines & the WTO
Doha Ministerial Conference
Frederick Abbott, September 2001
6. Some Assumptions on Patent Law and Pharmaceutical R&D
Carlos Correa, July 2001
5: TRIPS Disputes: Implications for the Pharmaceutical Sector
Carlos Correa, July 2001
4: Exploring the Hidden Costs of Patents
Stuart Macdonald, May 2001
3: Generic Drugs, Compulsory Licensing and other Intellectual
Property Tools for Improving Access to Medicine
Michael Gollin, May 2001
2: Micro-organisms, Definitions and Options under TRIPS
Margaret Llewelyn and Mike Adcock, November 2000
1:Trade-Offs and Trade Linkages: TRIPS in a Negotiating Context
Peter Drahos, September 2000
Seminar Reports and Other Papers: see web site
Issues papers:
4. Bilateral agreements and a TRIPS-plus world: the Chile-USA
Free Trade Agreement
Pedro Roffe, October 2004
Occasional Papers:
1. Protection of intellectual property and public health within
the framework of the Chile-U.S. free trade agreement
Carlos M Correa, October 2004
2. Between a r ock and a hard place: access to medicines
under TRIPS and the DR-CAFTA
Federico Alberto Cuello Camilo, November 2004
QIAP publications 2004
QUNO / QIAP publications 1999-2004